JULY / AUGUST 2015
All change: The complete guide to new product development (and its failures)
IN THE IDEAS BUSINESS
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ROCKET LAD
By next year Peter Beck plans to send a satellite into space. Every week. From the South Island. Here’s how. CUSTOMER CENTRAL
What if Jeff Bezos ran your business?
EYE POD
Doctor turns phone into retinal camera
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For decades men have been told that there are two ways of dressing: formal and casual. Each has its place – but those places are miles apart, and should never be bridged. This winter sees an end to that limiting orthodoxy. Want to wear a bomber jacket over your suit? Go right ahead. A blazer with a crewneck sweat? That’ll work. A flannel suit pant with vintage trainers? Perfect. So long as the fabric’s right and the cut just so, everything is on the table. Go test your newfound freedom.
B A R K E R S C L O T H I N G . C O M
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CONTENTS | July – August 2015 | Issue 58
Forward
Special feature
8
Editorial Storytellers rule the world. PowerPoint users don't
56
10
Crazy contraptions Making money – and movies – out of mad machines
13
Big girls don't code Sexism still rules in IT
16
Breaking back How a fractured spine inspired a video game
18
Workspace
Idealogic Our official TV guide
14
A well-hatched plot Creating a business model from cheap beer deals
32
Rocketlad New Zealand's Peter Beck wants Southland to become a global satellite launch centre. Always has.
42
Customer centricity Why Amazon CEO Jeff Bezos sometimes leaves an empty chair at the conference table. It's the customer, stupid. How to get more from your data Six ways to climb aboard the analytics train
20
Toy story three Kiwi siblings making their own family fun in China
26
The gear Rose-tinted design to keep your workplace purring
50
Deconstruction Making interesting stuff out of old child car seats
62
6 | IDEALOG.CO.NZ
What's your personality Myers-Briggs can help find your dream start-up team
73
Finding awesome weirdos New recruitment quizzes which focus on cultural fit
75
Books Keynes made interesting, worklife balance made boring, the legacy of Roger and Ruth, and Jack Welch
Features
Emerging talent: Eye pod One in the eye for blindness
10
72
32
19
30
Healthcare by design How a bunch of students are disrupting Auckland Hospital
The next big thing The complete Idealog guide to new product development, including how to get it right, and what can go wrong
50
76 Columns 76
Great expectations Why do whizz-bang tech launches often fail to deliver?
77
Rethinking the review A new approach to appraisals
78
Survival of the richest A new model for journalism
79
Close encounters Want creativity? There's no substitute for getting out and meeting some real people
80
Jobs for life Don't fire them. Shoot them
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EDITORIAL | July – August 2015 | Issue 58
Storytelling: 10 PowerPoint: Nil Why those who tell the stories rule the world. And those who rely on PowerPoint presentations don’t. I WAS AT A FUNCTION the other day at Auckland’s Innovation Precinct. It had the word “disruption” in the title; the word “digital” was in there too. Exciting topics. And it started with a Very Dull PowerPoint. It kind of reminded me of the opening of the Innovation Precinct – in that very building, a year or so before. The Mayor spoke – worthily. And Steven Joyce. Ditto. And someone from the Innovation Precinct committee. And then they cut a ribbon. Really. They declared the building open. Call me superficial and self-serving and hypocritical. After all, I am the editor of a magazine about innovation using a print format. But in my superficial, self-serving way, I still think there is an important message here. And it’s about the importance of great storytelling. I know, storytelling is the buzzword of the day. Conferences. Workshops. Books galore (I recently saw an article entitled “25 essential books on storytelling to read in 2015”). But then I watch enthusiastic young innovators pitching to potential investors using a 25-slide powerpoint in Times New Roman, with a few free pics from Shutterstock. Doesn’t do it for me. I wasn’t at the launch of Peter Beck’s rocket on Great Mercury Island in 2009, but Idealog publisher Vincent Heeringa interviewed a few people who were for his cover story (page 32). I imagine helicopters and bubbly and (after a last minute dash to the hardware store for a spare part) fire and loud bangs. I hope there wasn’t a ribbon or a PowerPoint in sight. There’s another example of storytelling as
Issue 58
a marketing tool on page 8 of this same print magazine. Joseph Herscher was an unknown Kiwi software guy driving his flatmates crazy making real-life Rube Goldberg machines on the kitchen table in the evening after work, using stuff he got from the $2 shop. Then he got the idea to gel his hair madman-style, grow an eccentric tash, make videos of his mad machines in action, and stick them on YouTube. His first one got 2.7 million hits, his second one over 8 million. No surprise, he started getting job offers from companies wanting him to make machines for their ad campaigns. He even got invited to the Venice Biennale. He was a great story, well told. Why does Kickstarter work? Because the compulsory video component forces people to tell stories. Why does TED work? Because it’s about people telling their stories. Professor Paul Zak, writing in the Harvard Business Review, describes an experiment which showed that when people get told compelling stories, their brains release a neurochemical called oxytocin, which enhances someone’s sense of empathy and motivates cooperation with others. Another story-telling devotee, Shane Snow, asked 3000 people who they would trust more as their leader: J.K. Rowling or Queen Elizabeth. The landslide winner was the creator of Harry Potter, not the 60-year-reigning monarch. Watch Snow’s TED talk for the reasons, but basically his line is “Those who tell the stories, rule the world”. If New Zealand is to be full of internationallysuccessful companies, (rather than locallysuccessful innovators) we need to get better at storytelling. And the first thing we should take to market is a PowerPoint vaporiser.
Editor Nikki Mandow editor@idealog.co.nz Art director Matthew Moss Designer Miriam Sharpe Digital editor Jonathan Cotton editor@idealog.co.nz Assistant digital editor Johan Chang johan@tangiblemedia.co.nz Proofreader Madeleine Heron Commercial manager Donna Swain (09) 358 7291 donna@tangiblemedia.co.nz Marketing manager Toni Vallance (09) 280 0713 toni.vallance@tangiblemedia.co.nz Production manager Jay Sayer Publisher Vincent Heeringa vincent@idealog.co.nz Contact Idealog Idealog is published by AUT Media 19 Lyon Ave, Mt Albert PO Box 77027, Mt Albert, Auckland 1350 (09) 360 5700 idealog.co.nz/contact editor@idealog.co.nz Subscribe to Idealog 0800 782 347 idealog.co.nz/subs support@tangiblemedia.co.nz Production Tangible Media tangiblemedia.co.nz Distribution Netlink
Copyright 2013 by Idealog Limited. Idealog™ and The Voice of the Creative Economy™ are trade marks. Idealog magazine is published bi-monthly. ISSN 1177 097X. Idealog is subject to copyright in its entirety. The contents may not be reproduced in any form without written permission of the owners. All material sent to Idealog will be assumed to be publishable unless marked ‘not for publication’. Idealog invites contributions but accepts no responsibility for unsolicited material. The opinions expressed in this magazine are not necessarily those of AUT, AUT Media, Tangible Media or Idealog Limited.
Printed by Image Centre Idealog is printed using vegetable oil-based inks. Paper supplied by BJBall using pulp from well-managed forests and other responsible sources.
Nikki Mandow Editor Founders Martin Bell, Vincent Heeringa, David McGregor
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SMALL MINDS WA N D E R
Forward Idealogic
| Pitch Circus | Emerging Talent | Deconstruction | Gear
The mad machines of Joseph Herscher How the crazy cartoons of a Pulitzer prize-winning American engineer became the crazy inventions of a Kiwi software developer, who became the subject of a New Zealand-made movie, out in July. TEXT BY JOHAN CHANG
Wake up Rube Rube Goldberg's crazy inventions – the inspiration for Joseph Herscher's models, were designed to make the simple things in life complicated.
10 | IDEALOG.CO.NZ
WAKING UP IN HIS Brooklyn apartment, New Zealander Joseph Herscher has a Rube Goldberg machine as his alarm clock. Traditional ones just don’t do it for him. Instead, turning sleepily, Herscher grabs his ringing phone off the desk. A wooden ruler below the phone lifts up, and a toy trucks rolls off. A spirit level is pulled by a piece of string tied to the toy truck, which then drops a small fire extinguisher. This tugs on more ropes, which dramatically pull apart Herscher’s curtains. It’s the sort of wake-up call you can’t just roll over and ignore. Herscher, 30, has been a Rube Goldberg nut since he was a child. That was when he started taking Goldberg’s drawings – cartoons of contraptions designed to make the simple tasks of every day living (watering the plants or opening a newspaper) really complicated – and turning them into real-life mad contraptions. A couple of decades later, and mad machines have become Herscher’s livelihood. Next month, a documentary about one of his machines, which dresses him from head to toe (using, among other things, a giant rolling clock, a swinging chandelier, a yellow squirrel and two ironing boards) will premier at the New Zealand International Film Festival. The film Joseph Gets Dressed is directed by Kiwi writer, musician and film producer Gemma Gracewood. Born in Auckland, Herscher arrived in New York in 2009, with a job lined up as a software developer. His parents were both musicians (duo act “The Jew Brothers Band”), so he didn’t fancy the path of a struggling artist. Creating Rube Goldberg machines remained a hobby. “I’d come home [from work] everyday and work for four hours on my machine, because I never thought it could be a more serious thing.” Herscher says. “Who would?” But his first video, Crème That Egg, featuring the complicated demise of a Cadbury’s crème egg, had gone viral. (It has had 2.7 million YouTube views.) Herscher decided he couldn’t ignore the urge any longer. He went part-time at his “grown up” job and in 2012 turned to his passion full-time: creating machines, filming them, and sticking them on YouTube. Somewhat to his surprise, ad agencies and businesses started pestering (and paying) him to make his mad machines. He led a children’s workshop at the 2011 Venice Biennale. And »
G R E AT M I N D S WA L K
K E E P WA L K I N G
FORWARD | News
Joseph Herscher gets dressed
2011 video The Page Turner, has more than eight million YouTube views. Not bad for a two-minute clip about opening a newspaper. The rags to riches (creativity-wise) story would have resonated with Rube Goldberg himself, who in the early 1900s left a job as an engineer for the San Francisco Sewers Department and became a Pulitzer Prize winning cartoonist, sculptor and author. Gracewood, another Kiwi in New York, approached Herscher with the idea of creating a short documentary film about his machines in March 2013. Joseph Gets Dressed was born. The project was largely self-funded, but it also received around $20,000 from the New Zealand artists' version of KickStarter – Boosted.org.nz.
“I always wanted the NZIFF to be our first festival,” Gracewood says. “We both live overseas, but our family, friends, and supporters of the film are here.” For the moment they’re back in Auckland, collaborating with the Auckland Transport and Technology Museum (MOTAT) and the NZ On Air digital media fund, to film a new YouTube series called Jiwi’s Machines, which Herscher wants to turn into a full-length TV show. In addition, Herscher is leading workshops for kids to learn how to create their own Rube Goldberg machines. More than 130 years after Goldberg's birth, the next generation of crazy machine inventors are being born. ½
All Rights Reserved. RUBE GOLDBERG ® is a registered trademark of Rube Goldberg Inc. All materials used with permission. www.rubegoldberg.com
Social sensors From measuring your vital signs to locating empty parking spots, sensors are sneaking into our lives. And as befits any self-respecting modern technology, sensors are tweeting. Here are a few that caught our attention:
PANAMANIAN POTHOLES Sick of pothole-ridden streets, a Panamanian news station linked up with an ad agency to put sensors inside a number of particularly hazardous holes. When a vehicle runs over one, the device automatically sends a snarky message to the Department of Public Works’ Twitter account. Apparently it works – the potholes miraculously get repaired.
12 | IDEALOG.CO.NZ
SOCIAL SHARKS In Western Australia, several hundred great white and other dangerous sharks have been tagged with sensors. When a shark gets to within a kilometre of a local beach, its sensors send out a tweet through the local surf life saving group’s Twitter account.
HONEY BADGER Looking for an inventive social media strategy, Johannesburg Zoo turned its honey badger into its Twitter expert. BG's cage was fitted out with motion-sensors linked to his Twitter account, @ ZooTweetsLive. He tweets selfies, pics of his meals, and snide comments about other animals.
DANNY BUOY Sensors on a buoy in Ireland’s Galway Bay collect information about weather and water conditions, and tweet them out – along with updates on the 39,000mile Volvo Ocean Race, which finishes there.
FORWARD | Idealogic
21st Century vexed: TV in 2015 BACK IN THE DAY, older readers will recall, our television choices were limited to staying in and watching Coronation Street, or going outside to steal fruit off Mrs Adamson’s tree. In 2015 things are a little different. Coronation Street is still there, but television itself now
SKY You already have it, probably. Dad knows how to work the remote Wounded bulls consider their charging to be reasonable in comparison
TVNZ Ability to make Mike Hosking disappear simply by switching off High proportion of shows about shearing, cow genetics
comes to our homes via more wires, fibre optic cables, wifi signals, aerials and satellite dishes than that plumber’s van parked down the road from Kim Dotcom’s place. What hasn’t kept pace with this explosion in viewing choices, though, is time in the day
TV3 100% more Jono and Ben than competing channels Correspondingly high proportion of Bachelor NZ, Paul Henry
to actually watch the stuff. How to choose? Simple: eschew the experts, put aside the promos and place your trust in this, the Idealog guide to on-screen entertainment and information of every kind.
CHROMECAST Plug into a world of online content and apps for just $69 No one really knows what that means
FREEVIEW Built in to many TVs, no ongoing cost Limited unique content, user interface reminiscent of 1980s ATM
PEOPLEMETER Provides advertisers and network owners with comprehensive and accurate audience figures 17% chance that Peoplemeter numbers are really generated by a monkey and a dartboard
APPLE TV At $99, the most affordable way to add yet another Apple gadget to your life Iceblock-stick-sized remote easily lost, swallowed
ILLUSTRATION LUSTRATION BY TANE WILLIAMS
NETFLIX NZ version removes requirement to lie about living in 90210 zip code Limited content will make you wish you were still lying about the zip code
LIGHTBOX Free trial then cheap with Spark broadband Focuses on TV series not movies, so you’ll also need a movie option
SKY NOW Watch Sky programmes on any Internet-connected device Service may be unavailable when more than three people are watching
LOCAL VIDEO STORE Huge range of mainstream and cult movies; knowledgeable staff Closed, turned into a Mexican restaurant in 2009
NEON Free trial, then cheap with Vodafone broadband Limited catalogue means it doesn’t really stand alone
JULY – AUGUST 2015 | IDEALOG.CO.NZ | 13
FORWARD | Diversity
Big girls don't code (The gender gap in IT) APPLE
Jargon watch
Who said sexism was dead? Mumtrepreneur (n) Inspirational mother with her own business, or a patronizing moniker, depending on your viewpoint. After all, we don’t have dadtrepreneurs, just… businessmen
Mousewife (n) Stay-at-home mum with an internet business on the side. Or a cute character in 1950s book by Rumer Godden
Menimist (n)
“This is a Rosie the Riveter moment, because the jobs are here and we don’t have the workers to fill them.” From the new US movie, CODE: Debugging the gender gap, about the problems of sexism and a lack of women in coding and computer programming. Directed by Robin Hauser Reynolds
14 | IDEALOG.CO.NZ
Advocate for men’s rights, or misogynist who reckons they have a good excuse to mock feminism
Momshell (n) Hot mama; a reason for guys to do school drop-off on the way to the office
Dad bod (n) An apparently pleasing mixture of working out and working on your beer gut. A celebration of a lack of perfection. Would a woman get away with it? Not a chance.
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FORWARD | Pitch Circus
Breaking back
TEXT BY BEN MACK
FALLING DOWN AND breaking his back has paid big dividends for Wellington-based Mark Major – the latest winner of Ideolog’s Pitch Circus competition. A game based on his experience went viral, and now Major’s startup company GameStarter is aiming to be the next big thing in mobile gaming. Imagine breaking your back in China and being inspired to make a video game about the experience of falling nine metres down a building shaft. Sound far-fetched? Not if you’re Mark Major, who founded the Kiwi gaming company GameStarter in November 2014, on the back of an accident, where he tumbled through a plank on his way to the local 7-Eleven store. “I started designing an iPhone game around a horrible experience I had seven years earlier in Beijing, where I fell down a hole a fractured my spine. “I always wanted to turn that terrifying experience into something a lot more fun; apply a new lens to it.” Rather than spend thousands of dollars, and years of study, mastering game design, Major turned to a decidedly more cost-effective – and cutting-edge – development method: crowdsourcing. And he used the platform not just for money, but for ideas, skills and market research too. “I really see crowdsourcing as a future model for people who want to turn ideas into creations,” he says. “Crowdsource for expertise – there are armies of very talented people out there. “And crowdfund to show [your product] is commercially viable. This also teaches you great skills in marketing, promoting yourself and copywriting.” Major used three main crowdsourcing platforms: 99designs (where you set up a brief and then launch it in the market as a competition with a prize), and social media sites Reddit and Facebook. 16 | IDEALOG.CO.NZ
“
Crowdsource for expertise – there are armies of talented people out there. And crowdfund to show your product is commercially viable. This also teaches you great skills in marketing, promoting yourself and copywriting.
”
“I crowdsourced by going onto Reddit and Facebook and posting a very simple poll targeting iPhone game players. I wanted to determine the best game design and get them to tell me their favourite gameplay features in iPhone games,” Major says. The outcome was the finished game, Plummet Free Fall, being released for iPhones
On the rise: GameStarter’s team, from left to right. Bottom: Alistair St Pierre, Nay Lin Htaik. Middle on chair: Mark Major. Top: Phyo Thu, Hamish Palmer, Joss Doggett.
PHOTOGRAPHY BY DAVID ALLEN
The story of a Wellington entrepreneur whose fractured spine inspired a gaming start-up, who used crowdfunding to get the design expertise he needed, and who won a million dollar bottle of Johnnie Walker
in early January. World domination – or at least viral success – garnered international media attention in publications such as China Daily. “Plummet Free Fall ended up getting 350,000 downloads around the world and was number one in four countries [in terms of total downloads].” Available free from the Apple App Store, revenue from the game is primarily generated through in-game advertisements. Players can permanently remove ads, however, for $1.29. Based in Wellington, GameStarter’s eight-person team is currently developing its next mobile game, Plunge Free Dive. This one is based on New Zealander William Trubridge, the current freediving world champion and first person ever to dive down to 100 metres (and come back up again), without air or fins. Trubridge is now embarked on a mission to help the native Hector’s and Maui’s dolphins. Major says the team is working hard with people who’ve already expressed interest in the game to determine the best crowdsourcing model to make the next project happen. “[We are still deciding] whether it is developed through incentivised competitions, or whether we treat it more like a social development company.” GameStarter’s primary workspace is the startup incubator Creative HQ, where Major says the support has been a boon. “[The] New Zealand games industry is the opposite of competitive. Other game development companies are happy to support us because the market is so big. “One of the great things about being part of Creative HQ is the high rate of collisions [accidental meetings] with very talented people who are attracted to startups.” Still, being involved in a new venture involves some sacrifices. “The worst part is the low personal cash flow early on,” Major says. “You need to be as lean as possible so you can survive those early stages. Certain luxuries, like craft beer, have to go by the wayside.” Winning Idealog’s most recent Pitch Circus competition has helped GameStarter take off. But rather than moving up to the aforementioned craft beer, the prize money, Major says, went to runway costs. Besides, another prize just so happened to be a bottle of very good whisky. “The bottle of Johnnie Walker Gold has become our Million Dollar Bottle,” Major says. “We have a list of Big Hairy Audacious Goals (BHAGs) which we review each month. On completion of each BHAG, a glass of whisky is poured for each team member, the goal is celebrated and the bottle marked with the successful goal and date. The plan being that when we finish the bottle of whisky, we will be a million-dollar company.” ½
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Pitch Circus is a live event within Idealog’s popular Idealog Live networking event series. Three contestants each prepare a 3-minute, 33 second presentation explaining a little about their business. Event attendees then use a mobile web app to vote for who they think should win. For the next Idealog Live/Pitch Circus event check idealog.co.nz.
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FORWARD | Pitch Circus
The Hatchet guys (From left to right) Danesh Abeyratne (co-founder), Connor Finlayson (cofounder), Tom Numan (lead designer), Josh Brake (co-founder,CTO), Sam Etheridge (lead developer)
Three students and a wellhatched plot How looking for cheap beer deals turned into a business model. TEXT BY SUSAN EPSKAMP
IMAGINE THE SCENARIO: Three young
university students are enrolled in the Victoria University Entrepreneurship Boot Camp. They like drinking and are running out of money quite fast, so need to find the cheapest watering holes in Wellington. Oh, and they also need an idea for the boot camp. They start investigating places with happy hours, 2-for-1 deals, Thursday sangria jugs, drinks specials; the list is endless. Ta dah! An inspirational idea: one that fuels their drinking as much as it does their company. What if they could centralise all the special offers in the market on on a particular day in their area, onto one platform? Danesh Abeyratne (35), Connor Finlayson (25), and Josh Brake (25) are co-founders of this vision, which they have named Hatcher. They have come up with an app that allows people who need a place to go tonight – but don’t have much money – to see which venues have specials on, and what the deal is. Gone are the days of fragmented advertising on Facebook or crumpled flyers: Hatcher's vision is to give customers one place that lets 18 | IDEALOG.CO.NZ
people see only ads which are relevant to the time and place they want to go out. With their main target market being students, there is also an emphasis on being able to connect with friends. Hatcher allows people to see which bars and restaurants their friends are frequenting. “At the moment there is no app out there which combines the social aspect of things that are happening around you,” Finlayson says. FAST-MOVING The company is moving at speed. Hatcher was created at the boot camp which ended in February. By the end of the month, the idea was in place and the company was born. The Hatcher team presented to the panel at Idealog’s Pitch Circus in April, alongside two other start-up ideas. The product was launched
on May 27 and already has 1104 events in 793 venues listed in Auckland and Wellington. The three partners – and three employees – have now found a home at start-up base Creative HQ, where they were invited to set up after the boot camp, and where they are now enrolled in the Global Growth Programme. Head of Incubation at Creative HQ, Alan Hucks, says he has challenged Hatcher to think about an international business model. “If they are able to build a product that can be used successfully in smaller places, it will be able to grow globally in larger cities.” Finlayson says ideally Hatcher could be in Europe in five years, with a tool that could also help travellers find the bars and restaurants being used by locals. “We want to go all over the world”, starting with a scale model for Wellington, then Auckland and later larger and larger cities. Based on feedback and interest they received from businesses during trials in early May, Finlayson says they are confident they can grow reasonably fast in New Zealand. “We started the week with 15 test users to find bugs and are now up to 59 users, after they started sharing it.” TALKING DOLLARS The co-founders say they aren’t charging for listing on Hatcher while the app is still in development. “The idea is that we want to prove what we are doing works before we ask anyone to pay,” says Abeyratne. They are also not looking for investment at the moment, being so close to their launch date. “When it comes to the stage to go international we may start to do that.” Abeyratne says the plan is to use ads on Facebook, and posters at the university to bring more users on board – with the aim of getting “a few thousand users” within the next few weeks. After that they will approach more businesses. Depending on the success of the campaign, signing up to Hatcher will cost venues between $35 and $80 a week, Finlayson says. Hatcher is available in iOS for Apple and in the Google Play store for Android.½
| Emerging Talent
One in the eye for blindness A Kiwi eye specialist has invented a simple tool that turns a smartphone into a diagnostic tool – and it's free to all users.
IMAGES BY ELLIOTT BLADE AT TEDX AUCKLAND
TEXT BY HANNAH BARTLETT
IN EARLY MAY, ophthalmologist Dr Hong Sheng Chiong released a cunning 3D printable gadget that turns a smartphone into a retinal camera for eye examinations. Twenty four hours later, he woke to 150 emails. Another three days, and there had been more than a thousand downloads of his adapter, the OphthalmicDocs Fundus. It hadn’t cost anyone (except him) a penny. And that’s just how Hong likes it. By day, Hong runs the eye clinic at Gisborne Hospital. But in his spare time, he is working towards a wider goal: giving doctors in the third world the tools to detect – and therefore treat – preventable blindness. The OphthalmicDocs Fundus (OphthalmicDocs is the name of Hong’s company; fundus is a scientific name for the retina) is a 3D printable gadget; basically a small arm which holds a condensing lens at one end and attaches to the camera part of a smartphone at the other. It turns a mobile phone into a retinal camera, which can look into the back of the eye, the most difficult area to view. Combined with the OphthalmicDocs Eye App, free eye-testing software containing tests and imaging, the camera puts a portable eye clinic in the hands of a doctor. Hong says even eye charts on the wall of a clinic can cost thousands of dollars, so he’s converted all the basic vision tests into a smartphone-friendly app format. Hong believes he has built the first, free, opensource eye equipment in the world. And that’s just how he likes it too. Now he’s calling on users around the world to send back suggestions for design improvements, which can be included in the next iteration. 3D models can be submitted now via the company’s website. “We believe everyone deserves access to quality eye care. It’s supposed to be cheap, to help people in developing nations. So why would you put a label on it or mark up the price by 300-400%? Those things really make me sick.”
Dr Hong Sheng Chiong demonstrates the OphthalmicDocs Fundus at TEDx Auckland
Born in Borneo, Hong did his medical degree and first round of postgraduate training in Ireland, and then headed to Kenya, Nepal and Malaysia before moving to New Zealand. He says working in the third world involved challenges he had never anticipated. “In developed nations, when you’re doing all these conventional eye examinations, you take the equipment for granted. But when I was in those [developing] countries I realised that people are trying their best to care for the patient but they just don’t have the right equipment or the right tools.” So after finishing his Postgraduate Diploma in Ophthalmology at Otago University, Hong and his team (an eye specialist, a product designer, a medical engineer and an IT specialist) developed eye exam gear fitting three criteria: affordability, accessibility, and accuracy. Hong says while charities often donate expensive equipment (one camera can cost $20,000), the risk is that if funding stops or volunteers are no longer available, communities are again left to fend for themselves. Meanwhile, traditional ophthalmic equipment is often bulky and hard to transport to people in remote communities.
“That’s why I decided to create a system that’s accurate, portable, affordable and accessible, so that people in those places, all they need to do is pack all those things in a backpack and they can do the basic eye examinations that they need.” Accurate diagnosis is the crucial first step to finding the right treatment, he says. “In a primary or rural setting where you’re a normal GP or emergency physician, not an eyedoctor, and you haven’t got access to any of this eye equipment, how could you make a diagnostic judgment on a patient?” Earlier this year Hong went back to Borneo to test out his ideas. “I saw about 15 people, villagers and some family friends, and I managed to pick up at least three or four cataracts and a blinding corneal condition as well.” He’s also used his baby as a test subject – much to his wife’s initial trepidation. “I was trying to see if it could work on that specific situation, because if you’re looking at babies and kids it is almost impossible to bring them up to the microscope in the eye clinic.” Hong has also provided many Kiwi GPs with the equipment, as he says it improves the referral system in New Zealand. Now the team has a further 10 things it is working on, including a microscope to look at the front of the eye, further tests within the app and a virtual headset. ½
Idealog’s Emerging Talent feature combines a great story about new talents and technologies written by an emerging journalist. In this case the article was written by AUT communications student Hannah Bartlett. JULY – AUGUST 2015 | IDEALOG.CO.NZ | 19
FORWARD | Innovation
Toy Story Three From the New Zealand siblings who brought us the Robo Fish (one of the biggest-selling toys of all time), comes what could be this summer’s toy sensation – a hose attachment the makers claim can blow up 100 water balloons in under 60 seconds. Oh, and help boost sales to $200 million.
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IT’S A STIFLING , hot, summer day. One bright spark suggests a water fight, an epic battle. The weapon of choice? Water balloons. It always seems like a great idea. The parent, filled with purpose, starts filling the first balloon, while the children wait with baited breath. Then the balloon splits. Oh well, on to the next one. One of the kids insists on filling up the next balloon, and then drops it. She catches her finger trying to tie the third. After 30 minutes, the children are over it, and the parent wants to stick forks in their eyes. Help may be at hand. Zuru, a clever New Zealand-owned toy
company based in China, has launched a new toy called Bunch O Balloons, which claims to fill 100 water balloons in under 60 seconds. Zuru is owned and run by three siblings from Cambridge (the NZ one), who employ 750 people and turn over $100 million – and rising. Bunch O Balloons – a hose attachment with 37 pre-connected balloons – is the latest in a series of successful toy launches, including the wildlypopular Robo Fish. So how does a family-owned company discover a potentially game-changing toy? Bunch O Balloons is the brainchild of Josh Malone, a Texas father of eight, who wanted to find a way to fill water balloons quickly.
PHOTOGRAPHY BY MICHAEL SCHULTZ
TEXT BY JENNY KEOWN
20 | IDEALOG.CO.NZ
Idealog test-drives Bunch O Balloons
Left and right: Late summer test run on Bunch O Balloons brings backyard excitement Above: Zuru co-founder Nick Mowbray is only 30, but runs a $100m company.
His system allows you to fill lots of balloons at the same time, then give them a shake to activate the self-sealing rings and push the balloons off the attachment, ready to go. ( (Idealog g gave it a test drive (right) and was slightly underwhelmed – but maybe that was just user error.) Zuru director Nick Mowbray says they discovered the product the same way as everyone else – via the media. Malone put his invention on the crowdfunding platfrom Kickstarter in July 2014, with the goal of raising US$10,000. Instead, he raised US$1 million in less than 20 days. The story went viral, attracting a staggering 1 billion media impressions and stories in Time
Magazine, CNN, and Good Morning TV. Cue, Zuru. Mowbray saw the coverage and wanted the commercial rights. He knew Zuru was up against much bigger players, which could offer more money. So he got on the phone to Malone and didn’t give up. “I literally contacted him every day – with no replies because everyone was trying to get in touch with him.” Mowbray’s team calculated Malone’s invention would take 1.5 hours to put together by hand, as all one hundred balloons need to be pre-tied. “I eventually managed to get him on the phone and told him the only way that his invention could be commercialised and go to »
My kids and their friends couldn’t wait to try it. “We can fill 100 water balloons in under 60 seconds! No way!” said George. We had a plan. The kids would play after school, in the area of the garden that still got sun at that hour. The water battle would be epic; a swansong to the end of the vaguely warm weather. I attached the hose. I turned the tap on. “It’s not 100 balloons in under 60 seconds, is it,” said George, counting. “It’s 37 balloons.” He had a point. After 40 seconds, some balloons were filled, others were pitifully small. George shook the balloons off the attachment, as per the instructions, and they landed in the bucket. “They look like they are deflating,” he said. Indeed, some did look they had punctured. I pondered user error. “Oh well, just play with the ones you’ve got!” I shouted. They did. They threw 15 balloons at each other, laughed and ran around. We didn’t have much success with the next lot of Bunch O Balloons either. George held the bunch over the bucket, and we debated about whether we had filled them up enough. “That will do!” said my husband. “Let’s get in to it!” We decided to go for the fast-fill technique with the last bunch, and that went better. There were still some sad looking balloons that wouldn’t inflate but the kids had enough to have more of a fight. The verdict from my test group of four kids was the balloons were underwhelming. They had visions of a big fight with balloons that filled easily. Instead they got an interrupted fight, with not as many balloons as they had hoped for. “They didn’t inflate well,” said George after the fight, under blankets with a hot chocolate. Verdict: Bunch O Balloons is a great concept and there is potential for some fun to be had. But if your job (or your credibility with the kids) is at stake, I’d recommend a test run. JULY – AUGUST 2015 | IDEALOG.CO.NZ | 21
FORWARD | Innovation
Fast fish: The success of Robo Fish and other Zuru toys has lifted the company's sales to $100 million a year, with the goal being turnover of $200 million in 2016.
a mass market, was if it was automated. “This sort of toy can’t be put out at a premium, people can go out and buy a balloon and string for next to nothing. The automation proposal peaked Malone’s interest and he jumped on a plane to see us.” Zuru’s R&D team, based in Guangzhou, custom-made a test-pilot machine using lasers and advanced robotics to put each ‘o’ ring and balloon on to the straw and assemble it. It wasn’t easy. The first machine had to be redesigned almost 20 times before Zuru had a working model that could be scaled, says Mowbray. Malone liked what he saw and agreed to sell the commercial rights for an undisclosed sum. Zuru will launch Bunch O Balloons in the US, Australia, New Zealand and South Africa this year, and in Asia, Europe and the Middle East in 2016. But Bunch O Balloons is just one part of a wider strategy at Zuru. The company is building a multi-million dollar facility, the size of three football fields, focused on building machines for many of its other product lines. The factory is located in a part of Guangzhou Mowbray calls the “Silicon Valley of Asia”, 22 | IDEALOG.CO.NZ
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Ideally we want to look at our big competitors, Hasbro and Mattel, and ask: How do we lift the company to the next level? We are ambitious with our plans.
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because it is home to firms like telco equipment company Huawei, across the road, which employs 50,000 engineers. “We are setting up the facility in the area due to the talent,” says Mowbray. TOY STORY ONE The story is extraordinary: How Nick and Mat Mowbray (and later their sister Angela) went from the horse-breeding town of Cambridge (population 15,000) to Guangzhou (population 14 million) and founded a toy company which now has 750 employees across six offices, turnover of $100 million, and sales in 80 countries. It started small: with two small boys commercialising a miniature hot air balloon
Mat had made for a science fair when he was 11, using material like plastic bags and Coke cans. Ten years ago, sales outgrew the garage, and Mat and Nick reckoned they were on to something. So despite being barely out of their teens, the boys got on a plane to Guangzhou. They didn’t have anywhere to stay (so they slept under bushes for the first few days), and they didn’t understand China’s business environment. But they figured it out. “We were very young and did not have much knowledge of how anything worked. We made loads of mistakes but gradually found our feet. The biggest benefit has been building the whole company out of Asia,” says Mowbray. The big break came in 2012-2013, with the global success of Robo Fish, an electro-magnetic toy that swims like a fish when dropped in water. Almost 15 million children got a Robo Fish over those two years, and the toy outsold Lego for a while. The popularity of Robo Fish propelled it in to the sights of Disney. Recently, Zuru signed exclusive rights to Frozen 2 and Finding Dory. The company still produces 65,000 fish a day. As CEO, Mat manages the R&D team, and looks for the next big thing – which involves the team at Zuru sifting through many thousands of toy concepts. Anna heads the finance and operations teams, and has driven the growth of the company. And Nick, as director and president, heads international sales and marketing and overall global strategy. Robust debates with each other are not uncommon, Mowbray says. “Zuru has big plans. We want to strive to find new ideas and technologies to push the boundaries of innovation. “We want to increase revenue to US$200m by next year and continue to grow aggressively.” It is also pushing to sign bigger licensing deals with the large movie studios, he says. “Ideally we want to look at our big competitors, Hasbro and Mattel, and ask: ‘how do we lift the company to the next level’? We are ambitious with our plans, not wanting to settle.” The company is still owned by the three siblings, and they have grown it organically over the past nine years without any bank or outside investment. “We have explored the opportunities in terms of floating. The valuations and multiples being achieved in Asia right now are unprecedented. “But we feel we are in a major growth phase and can drive our valuation up with a couple more years of doing what we are doing.” ½
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In association with Tower Insurance
Tower Insurance is on a mission: To lift confidence in the industry New Zealanders are more likely to lose their home because of a fire than anything else, other than a natural disaster. But “sum insured” policies, the industry standard since 2013, mean customers don’t necessarily get their home fully rebuilt if they haven’t set their sum insured limit correctly. Tower Insurance is changing all that.
24 | IDEALOG.CO.NZ
“They are on-site with the customer, and giving them moral support. That’s important for us; it’s about that moment of empathy and helping and guiding people through what can often be an extremely hard situation.” Only about 10% of Kiwis consider losing their house to fire to be a high risk, despite fire being the most common reason for the loss of a home, after natural disasters, according to a Horizon Research survey. “We understand that people don’t think a fire will destroy their house, and when it does, it can be very traumatic and stressful. We know customers want quick resolution, support and security when they lose their home, or their house is badly damaged by fire.” “We’re pleased to be able to offer an improved level of cover for people’s biggest asset – their homes. We can guarantee that level of service to our customers, backed up by our total fire cover policy,” says Quirk. ½
IN BRIEF Tower Insurance launched the Full Replacement for Fire benefit standard with their house policies last October. It does not apply to Present Day Value policies or fire following a natural disaster.
PHOTOGRAPHY BY NIC STAVELEY
IN A DEVASTATING life event, customers with an insurance claim want to be listened to, and for things to be resolved quickly, says Tower Insurance Head of Claims Helen Quirk. “Tower’s mission is to give people the confidence that things will return to the way they were, if something unexpected happens in their lives,” she says. In October, Tower Insurance reintroduced full replacement cover for New Zealand houses destroyed by fire, bucking the industry trend which, since 2013, has been to cover only for “sum insured”. Quirk said Tower Insurance has been amazed at the way customers have responded to our move. “I have been stunned at the response. Customers are sending in hand-written letters, saying how glad they are to have the Full Replacement for Fire cover. And when we sent emails to our customers telling them that the cover was now included in their existing policy at no additional cost, we were inundated with emails of gratitude.” she says. In 2013, the New Zealand insurance industry generally made the move to a new type of home insurance known as sum insured, which is the maximum amount an insurer will pay out on a claim.
Which essentially means that if you lost your house due to an insured event, an insurer would pay the costs for the rebuild up to the sum insured. If it cost more than the sum insured, you would make up the shortfall. “While sum-insured looks simple on paper, in practice, it can be problematic. People have found it hard to understand,” Quirk says. Quirk concedes there may be an element of distrust among the public about insurance companies and their ability to look after their customers' needs, following the Christchurch earthquakes and the reported problems with claim settlements. “We want to fill that gap,” she says. “Our Full replacement for fire benefit gives people the confidence that if they lose their house to fire, things will be the same as they were before, regardless of the cost or the sum you’re insured for” says Quirk. “We will look at things like your house fittings, and replace them with a modern equivalent. If you had beautiful, ornate fittings, we’ll try to get you something as close to that as possible,” she says. “The same policy is applied to house contents. If you got your jeans from Kmart, Jeans West or Gucci – we’ll settle your claim accordingly” says Quirk. Tower Insurance understands that a house fire can happen to anyone, and the impact is totally devastating, she says. At the time of writing, one of Quirk’s claim team was dealing with a customer who had lost their house due to fire and there had been a fatality.
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Tower's mission is to give people the confidence that things will return to the way they were, should something unforseen happen in their lives.
Tower's Head of Claims Helen Quirk
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SOURCE: New Zealand Fire Service emergency incident statistics, 2012/13 http://fire.org.nz/About-Us/Facts-and-Figures/Documents/House-fire-probabilitytables-room-origin-time-week.pdf
JULY – AUGUST 2015 | IDEALOG.CO.NZ | 25
FORWARD | Gear
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In association with ANZ
Changing around the deck chairs Five years ago, Grant and Louise Dillon had never served a latte. Now they are running a popular Tauranga café – and relishing the opportunity to look at business in a new way. TEXT BY JENNY KEOWN
28 | IDEALOG.CO.NZ
‘in the business’ but don’t spend enough time ‘on the business,’” says Garth. The couple found quite a few things they could improve. Bottlenecks were occurring at the serving area, so they changed the physical layout of the kitchen and the café to make it more efficient and easier to serve customers. As the café grew in popularity and became busier, the couple needed solutions to make everything run smoothly at busy times. After a discussion with their bank, ANZ, they upgraded their EFTPOS terminal so it could accept contactless payments. This means that customers can simply tap or wave their card on the contactless terminal rather than swiping or
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You’ve got to continuously look at your costs, to ensure margins aren’t being eroded. Many business owners do a superb job working ‘in the business’ but don’t spend enough time ‘on the business'.
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PHOTOGRAPHY BY QUINN OCONNELL
GARTH AND LOUISE Dillon aren’t your average café owners. They had never touched an espresso machine before they bought Deckchair Café in Tauranga five years ago. Yet they have built up the café to become one of the most popular coffee spots in the Tauranga area, and love running the business, where customers have become like family. “If we are away for a couple of days, some people get a bit anxious, and ask ‘you haven’t sold it have you?’ This is the furthest thing from our minds. First and foremost we are ‘people’ people and that’s why we love running the café,” says Garth. While café management may be a new experience for the couple, together they bring a wealth of business experience to the venture. Garth was an accountant in a former life, and also a former general manager of a major plastics manufacturing company in Auckland, while Louise spent years in the banking sector. They have owned several businesses, including a car rental company in Queenstown. Garth is passionate about change management, and the efficiencies to be gained in a business from looking at things in a different way. He has acted as a consultant to the hospitality sector in Queenstown, critiquing their businesses and making the necessary changes to add value. So it’s no surprise that shortly after buying Deckchair Café, the couple had a very good look at the company, particular the recipes and food products. “You’ve got to continuously look at your costs, to ensure margins aren’t being eroded. Many business owners do a superb job working
Espresso love Garth and Louise Dillon quit jobs in the financial sector to buy and run Tauranga's Deckchair Cafe. And they don't regret the change.
inserting their card. “Because we can get so busy, every second we can save makes a big difference,” says Garth. “We installed a second EFTPOS terminal and decided on a wireless one that also allows us the flexibility to take it to the customer to save them from queueing.” Louise says it’s particularly good for their elderly customers. “Some can struggle with swiping their card, so tapping their card is great for them. And it means we’re ready for the time when people start using their phones to pay.” The couple’s ANZ Business Banker, Gill Smith, says the contactless payment option is
But part of their success comes from applying some of the disciplines from their former lives to their new business venture.
just one of the ways that ANZ is helping the café to succeed. And Gill should know: she’s a regular at the Deckchair Café on the weekends. A key attraction of the busy café, says Garth, is its freshly baked cabinet food. They employ two experienced bakers, one of whom is full-time, which ensures that there is a continuous production of freshly baked treats, seven days a week. “The food in the cabinet is such a strength – it’s a visual thing, and customers buy what they see. We now have many gluten-free options too. Having bakers preparing the cabinet food means the chefs can concentrate on the grill meals, without having to worry about cooking
up a batch of muffins as well,” says Garth. The summer period is their busiest time and at the end of the season the couple always look at their performance and use lessons they’ve learnt to make the following summer even better, says Garth. This can be anything from equipment upgrades, further staff training, or a refresh in café procedure, he says. “We would like to think we look after our staff well. It seems to be working, as they are a loyal crew, some with many years service. We also have staff who have returned to work at the café after a period away overseas,” he says. Garth and Louise aren’t interested in expansion or buying another business at this point in time, rather concentrating on continuous improvement of their café. “We just love it. It’s one of the best business moves we have ever made,” says Louise. And needless to say, they have learnt to make a damn good latte. ½
Are you a business owner? Talk to an ANZ Business Banker about how new technology can help find efficiencies within your business. Find your local expert at anzbusinessbanker.co.nz ANZ Bank New Zealand Limited
JULY – AUGUST 2015 | IDEALOG.CO.NZ | 29
FORWARD | Deconstruction
THE SEAT FRAMES
Research into recycling the plastic seat frame took two years and numerous phases, including testing for toxic brominated fire retardant chemicals, which would have made the seats unrecyclable. Trials are now indicating over 90% of the seat materials can be recycled. THE PLASTIC
Sitting pretty Recycling abandoned child car seats When mother-of-two Michelle Duncan was told by Plunket to take her expired child car seat to the dump, she had other ideas. Duncan works for Hastings-based “product stewardship” company 3R Group, whose raison d’etre is working out how to make things from waste, and therefore keep it out of landfill. Duncan did a bit of digging and discovered New Zealand car seat sales have risen from 40,000 in 2004 to 100,000 last year. But because the seats expire 6-10 years after manufacture (depending on the seat), there are lots of unuseable, out-of-date ones around. 3R’s solution: “reimagineering”, and the SeatSmart recycling project. With a funding grant from Auckland Council, and a cross-sector project team including councils, baby product retailers, NZTA and Plunket, 3R has come up with several things you never dreamed you could do with an unwanted child car seat.
The plastic goes into a specially-designed, mobile, generator-powered granulator (above), which reduces the seat frames to small ‘grains’ of plastic. Those are pumped into big bags and provided to recyclers, which mix the material with resins and make it into stabilising ground matting (below, centre left), and plastic caps for steel reinforcing bars on building sites. RIP EM UP
Michelle Duncan (left) was the brain child behind the car seat reimagineering project. Here she’s working with contamination remediation consultant Dr Ben Keet, who did x-rays to make sure the plastic was safe to use. STRAIGHT WORK
During the Seatsmart trial, Abilities Group, a non-profit group giving meaningful work to people with disabilities, dismantled the seats for recycling. Now SeatSmart is fully operational, they are dismantled as part of Department of Corrections community work programmes. THE SEAT BELTS
The belt buckles are separated from the seat belts, with the buckles sent off to scrap metal recyclers. Meanwhile, 3R is working with Karkt, which makes handcrafted bags from recycled materials. Karkt uses the child car seatbelts as handles or straps (far left) for its bags.
30 | IDEALOG.CO.NZ
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PROFILE | Rocketlab
ROCKETLAD New Zealand’s good for many things: sheep, cows, epic film locations. Now add rocket launches, weekly, from somewhere in the South Island. Peter Beck wants New Zealand to become a global satellite launch centre. Always has. Vincent Heeringa meets the man with big-boy dreams. PHOTOGRAPHY BY ALISTAIR GUTHRIE
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PROFILE P ROF OFIL LE | Rocketlab Rock Ro ket etla lab la b
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PROFILE | Rocketlab
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IT’S NOT OFTEN your boyhood dream comes true in your own backyard, especially if your dream is to blast rockets into space. Think of such things and your mind probably goes to Nasa or Russia or perhaps one of those barren-looking launch pads in a dusty Middle-Eastern landscape. Or Thunderbirds and their mysterious tropical island. But the stars have turned favourably for Southlander and rocket enthusiast Peter Beck. “If the best place in the world to launch rockets was in the middle of a desert that’s where I’d be – it’s that simple. But it turns out that launching satellites into space is best done from right here, in New Zealand.” Now that is a happy coincidence, because the Kiwi rocket pioneer, who has attracted global investment into what seems like a hare-brained scheme, wants to do just one thing: launch rockets and lots of them. Always has. In the next few months we’ll know exactly where his company Rocketlab plans to build its launch facility. The best guesses are somewhere remote in the South Island. On reflection, it’s an obvious location. “When we shoot, there’s nothing there: no air traffic, no population, no shipping, just nothing. In America, if you said you wanted to launch a satellite once a week they’d laugh at you because there’s shipping, there’s a ton of flights, there’s people, there’s everything everywhere. So New Zealand’s only advantage of being a small island nation in the middle of nowhere is if you want to launch rockets. It’s perfect!” Perfect wasn’t always how Beck described it. When he packed his bags in 2007 for the trip of a lifetime to Nasa and Lockheed Martin he discovered not the labs of his boyhood dreams but an industry moribund in bureaucracy and spiralling costs. “I started talking to these guys and they go ‘You don't want to work here’. I realised that I was just going to be a tiny gear in a giant bureaucratic machine. And even if I made it really really big in one of these organisations then I was still not going to do what I wanted – launch rockets.” Depressed, he caught a plane home. “I was, like, ‘Wow, this is my childhood dream and it’s just not panning out’.” But they make kids tough in Southland. And disobedient too. Aboard the flight, he Googled a company name and designed a logo and registered his company as soon as he landed. “About six months later I quit my job and started Rocketlab and that was that.” He makes it sound so easy. By the end of this year, Beck plans to send his first payload into 34 | IDEALOG.CO.NZ
Fired up: Central to Rocketlab's success is the innovation in engine technology and carbon-fibre construction. If it's hard to believe this sort of thing
happens in New Zealand, look back: Beck's knowledge of materials technology was honed at IRL, the sleepy Crown Research Institute, now part of Callaghan.
space, just the second non-government funded company ever to do so. After that, he says, there are 30 or so customers lined up to launch their small satellites. Plans are for one launch a month in 2016, and then one a week in 2017. The company claims it will eventually handle 100 launches a year. “Space is open for business,” Beck says. And at $US5 million a shot, business could be a blast. MISSION POSSIBLE With his cherub-like face, frizzy hair and uninterruptable patter, Beck ticks all the boxes of the mad scientist. Plus there’s the impatience of a man on a mission. People just don’t look up enough, he rails. “I’m constantly surprised at how little people
understand where they live. They might say ‘I live in this suburb in this city and in this country’ but nobody thinks of themselves as living in a solar system. If you ask the average person to name the planets, they can’t. I mean, can you?” It sounds like a test so I rattle off all the planets I can remember (“Pluto’s not a planet, it’s a ball of ice!” I say, remembering something from the news) and Beck looks slightly disappointed. “Okay so you might know more than most, though you got the order wrong.” Space matters. And it has mattered a long time for the 38-year-old. Beck built his own telescope as a child, following the example of his father Russell, who constructed a large telescope for the Southland museum when he was just 18 (it's still in use). Russell later became the museum director and Peter remembers “at about six or seven going to stuffy old Astronomical Society meetings at the museum where you've got all these boffins sitting around drinking tea talking about space and telescopes. A lot of these guys had PhDs and really knew their stuff. I found it absolutely fascinating and probably understood 5% of what was being said. But I was hooked.” »
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PROFILE | Rocketlab
All that talk could have made Beck an academic but he got his hands dirty in the family workshop, carrying on a passion that started with his grandfather who would lend tools to another famous Southland tinkerer, Burt Munro of The World’s Fastest Indian fame. “Burt used to come into my grandfather’s workshop and use his equipment and make a hell of a mess and leave,” Beck says. Engineering runs in the family. Before the museum Peter's dad, Russell, was an engineer. Peter’s middle brother Andrew is a mechanical engineer and electician; his oldest brother John runs a caryard by day and is a competive motorcyclist in the weekend. Cousin David still runs Beck Industries, the engineering shop set up by Peter’s uncle Doug. Their speciality: outdoor vacuum cleaners. The family garage was where the boys built gokarts and then, in their teenage years, souped up their Minis. “They all modified our Minis,” recalls Russell. “They’re easy to work on and actually pretty much anything you do improves them. Peter was determined to make his go faster.” The trend continued at James Hargest College in Invercargill, where the metalwork teacher “threw him the keys to the workshop” (says David) and then at Dunedin’s Fisher & Paykel, where he completed a tool-making apprenticeship and learned (says Russell) “how to combine engineering and design. He’s very precise – everything always has to work and look good, with Peter.” It’s also where, in 2000, with generous help from his colleagues at F&P, he built a rocketpowered bicycle that he demonstrated to the bemused public with a 140 kph blast down Dunedin’s Princes Street. “At F&P they would give me lumps of titanium and just write them off as apprentice-training projects. I'd build my rockets at night using their workshops. And when I moved into a design role I did simulations on rocket nozzles, optimising the flow for rocket fuels.” Next, Beck landed a job at Industrial Research Ltd in Parnell, Auckland (now merged into Callaghan Innovation), where he developed a deep understanding of metals and their strengths, and learned how to test his ideas. And his rockets. As at F&P, IRL managers turned a beneficent blind eye to his after-hours experiments. “It’s always been about the rocket, there’s never been a question really – even at high school. I remember I failed a careers assessment test and they needed to talk to my parents about it. I was so defined about what I wanted to do and the test didn't allow for that.” » 36 | IDEALOG.CO.NZ
T H E OT H E R G U YS
Despite Rocketlab’s blue-chip backers, the commercial space race is stacked with well-heeled players, including: Airbus – The European consortium is responsible for many satellite launches, plus it recently revealed plans for a recoverable first-stage containing 80% of the rocket’s economic value: the engine, avionics and propulsion bay; SpaceX – Founded by Tesla’s Elon Musk, SpaceX’s rockets have already docked with the international space station and they’ve put many satellites into orbit. The company claims to be working on a recoverable rocket too; Virgin Galactic – Richard Branson’s glamorous rocket-plane system (pictured) promises to launch small satellites into low-Earth orbit with a fully recoverable launcher. Beck regards Virgin Galactic as the nearest competitor.
PROFILE | Rocketlab
T H E T E C H N O LO GY
Peter Beck's new rocket, the Electron, contains at least four novel elements, compared to other satellite launch rockets: z Carbon-fibre construction makes it about as heavy as a Mini Cooper – and significantly lighter than conventional rockets; z The Rutherford engine employs battery-powered electric motors to drive its turbopumps. It’s also the first oxygen/hydrocarbon engine with all its primary parts created using 3D printing; z A ‘plug & play' payload system makes it easier for clients to integrate their satellites into the Electron, using their own staff and with multiple payloads at the ready; z Proprietary electronics: the avionics system in the original Space Shuttle weighed about 4500kg, excluding cabling. Electron’s avionics system weighs just 8.6kg.
Perfectly formed: The compact size of the Rutherford engine, combined with the lightweight carbon-fibre rocket means small satellites
(some as small as a lunchbox) can be deployed into low-Earth orbit for under $5million, about 26-times cheaper than current alternatives.
ROCKET MAD “Stick to the day job,” the joke goes. That’s good advice for most of us. But when Beck quit his job he attracted more than the usual bunch of family and fools. “Lots of people have passion for things and don’t follow through. Peter’s passion is rockets – but he’s also got the engineering skills. He can see it through.” That’s Alan Johnston, the building manager of IRL’s Balfour St premises, who shoulder-tapped the young entrepreneur to occupy empty space on the second floor. “There weren’t many places in Auckland that young entrepreneurs could go for this kind of hi-tech manufacturing. So I charged him a low rent and allowed him to use the equipment, especially the labs. I didn’t really ask permission from HQ. It just seemed like the right thing to do.” Another early supporter was Mark Rocket, the internet entrepreneur and space-nut who changed his name by deed poll from Mark Stevens and received media coverage as the first Kiwi to join Virgin Galactic’s space tourism programme. Beck approached Rocket and the two hit it off, with the latter adding seed capital and becoming a 50% owner until he exited in 2011. “We had a similar vision,” says Rocket. “We believe a space industry can emerge from New Zealand. In those first four years we worked hard to solve really difficult problems. But Peter’s got a lot of determination and the ability to overcome technical hurdles.” The pair attracted another curious supporter, Sir Michael Fay, the merchant banker infamous for his involvement in a 1990s scandal known as the Wine Box enquiry. Fay’s name, long vanished from the press, emerged like a blast from the past when he provided his Great Mercury Island for a maiden test flight. “We asked Sir Michael if we could launch off his island, and he just said ‘anything you need, you've got’,” recalls Beck. “And he gave us his helicopters, barges, house, chef – everything was ours. Every time we’ve launched out at Great Mercury Island, it’s always been the way. We’ve done a number of really, really important demonstration launches to really important people and, you know Michael’s helicopter comes and picks them up and there’s food laid on, there’s everything.” The support extended beyond individuals. “Everyone is rooting for us. I think it’s very Kiwi that no matter who we talk to, everybody is rooting for us and wants us to succeed. And you know, we talked to Civil Aviation and they bent over backwards to help us. We talked to » JULY – AUGUST 2015 | IDEALOG.CO.NZ | 37
PROFILE | Rocketlab
"IN THE NEXT D E C A D E YO U ' R E G O I N G TO S E E S PAC E C H A N G E FROM BEING A G OV E R N M E N TCONTROLLED D O M A I N , TO COMMERCIAL. I T ’S G OV E R N M E N T R A I L R OA D V E R S U S F E D E X VA N S . I T ’S J U S T AW E S O M E . "
central Government and they've always bent over backwards and helped us.” I suggest that it’s unusual, this kind of support. “Really?” Beck asks. “Well, it’s the honest truth and anywhere from the mayors of the cities where we’re trying to build launch sites, to well anybody. We’ve never ever hit a brick wall from any regulators or people in power.” The support came to a dramatic, and mediapropelled, climax at 2:28pm on November 30, 2009, when TV3 broadcast the maiden flight of Atea 1, Rocketlab’s prototype rocket. After technical delays (including a dash to a local 38 | IDEALOG.CO.NZ
mechanic) Atea, also named Manu Karere, blasted into a clear sky. “It was an amazing sight and sound to behold,” wrote Mark Rocket in 2011. “The rocket flew beautifully and powerfully into the sky, the throaty roar of the hybrid rocket engine reverberating over the island. The spectators were elated and tears of joy erupted. Some were crying from the drama of the day’s events and the profoundness of the experience.” Beck can be seen leaping and yelling like a loon on the TV footage.
UNDER WRAPS The nice lady at the Rocketlab reception says I can’t carry my cell-phone in the building. “Top secret,” she says. “But take a seat, there’s a new Woman's Day there.” Six years after that initial launch, and the bland, concrete office near Auckland’s airport hardly looks like the HQ of a pioneering satellite company. I imagine that in the US, something like Rocketlab would be barricaded with heavy fences and heavier guards. A reporter from a no-name magazine would certainly have trouble getting access to its boss. In New Zealand you just pick up the phone. It makes Rocketlab’s success all the more remarkable. With just three staff at the time (2010), Rocketlab won contracts with international firms for aerospace work. In particular from DARPA, the US Defense Advanced Research Projects Agency, which is attributed with the invention of technologies such as GPS, the CDMA cell phone network and Apranet, the precursor of the internet. Beck won’t say what Rocketlab worked on, but the money flowed and the credibility built, along with the staff. “By 2011, I sort of felt that we’d reached the point where we had enough credibility within the industry to do what I really wanted. It was kind of a crossroads, because we could have gone down the aerospace contractor road but I’m absolutely negatively inspired by doing that.” So he hit the drawing board again and laid plans for Electron, the rocket that he hopes will underpin the launch business (see “The technology” on page 37).
Again, the tributes and support flowed. “I was inspired by his audacity,” says Warehouse founder Stephen Tindall, whose K1W1 fund invested in October 2013, along with the Government’s Callaghan Innovation. Also inspired was Vinod Khosla, co-founder of Sun Microsystems and one of Silicon Valley’s most respected venture capitalists. Khosla’s investment provided not just much-needed capital, but global credibility. “We were kind of lucky with Khosla in the fact that they had previously invested in [microsatellite Company] Sky Box, sold last year to Google. So they had experienced firsthand the issues of getting a small satellite in orbit. Launch is the single hardest thing for small satellite companies.” There are dozens of satellite launches every year but what appealed to Khosla was the new approach to an old problem. So far most of the commercial effort has gone into satellite technology, with only a handful of companies, including Richard Branson’s Virgin Galactic, reinventing launch. “What’s normally done in this industry is that you take a heritage Russian rocket motor from here, and a heritage tank from over there, and you put them all together. But to start from scratch and assume there are no constraints is a new approach.” In that sense, the New Zealand-ness is part of Rocketlab's success. A country with no heritage in space is exactly where you’d expect ground-breaking innovation to come from. Khosla’s other investments in New Zealand are similar outliers: Lanzatech, the waste-toenergy company started by Sean Simpson, and Biodiscovery NZ, a biotech company extracting plant microbes. Rocketlab’s solution, the Electron, is novel. The combination of a carbon-fibre, recoverable rocket, a dual electric/dry fuel engine, secretsauce electronics and an end-to-end launch facility in New Zealand means Beck reckons he can slash the price of launch from about $US130 million to $US4.9 million. That saving means the much-hyped shift from government-dominated space travel to industry-led might finally happen. The Electron keeps winning impressive support. In March this year, Rocketlab conducted its second formal funding round, Series B, convincing Khosla and K1W1 to reinvest. It also added two industry heavyweights: Bessemer Venture Partners, one the oldest venture capital firms in the world (and the money men behind global success stories such as Staples, International Paper, Skype and Shopify); and Lockheed Martin, major supplier to military and space programmes.
JUNK SCIENCE
On board: Beck has won more than a sympathy vote, securing millions in funding from backers such as Khosla Ventures, Lockheed Martin, BVP
and Stephen Tindall's K1W1. "I was inspired by his audacity," says Tindall (pictured with Beck, above (left)).
With Rocketlab planning a weekly launch, that’s a lot of satellites in space. But like Douglas Adams says, space is big, really big. Think of it like launching a dingy into the Pacific. Here are three facts to comfort you (or not): z 6,600 satellites have been launched, 3600 remain in orbit, 1000 are operational z There are three levels of orbit: lower (where Rocketlab's small payloads are headed), middle (where GPS satellites sit) and geosynchronous (the space station) z At the end of their functioning lives, satellites are either left to orbit or shifted to a graveyard orbit, higher in space. Only about third ever successfully attain such a dignified end. The rest are classified as junk. And yes, space junk has crashed into other satellites with disastrous effects. Source: Wikipedia
“Rocketab’s work could have application in a number of aerospace domains and we look forward to working with them to complement our overall efforts in small lift capabilities and hypersonic flight technologies,” says Lockheed’s press release. Beck believes the investment comes because the market is ready. “In the next decade you're going to see space change from being a government-controlled domain, to commercial. It’s government railroad versus FedEx vans. It’s just awesome.” But the support also reflects a ridiculous dream. From its early days as a cheap tenant in Balfour Street to its current 50 or so international staff, Rocketlab is a testament to Beck’s passion and skill – and a textbook example of how it takes a village to raise a child. From a grandfather who encouraged play in his workshop, to tolerant employers and enthusiastic amateurs giving money, helicopters, media crews and chefs, the journey to space from Aotearoa might be one for us all to claim as our own. Watch this space. ½ JULY – AUGUST 2015 | IDEALOG.CO.NZ | 39
In association with Utilise
Utilise puts the smart into smart metering to bring value to businesses New electricity retailer Utilise is bringing the benefits of innovation in the electricity sector to small and medium-sized business customers. FOR TOO LONG business customers have been forgotten in the electricity market, so says new retailer Utilise. In a nutshell, it set out to change this using smart technology to reduce energy costs for its business customers. Utilise has been set up by business people for business people throughout New Zealand. However, one may ask why now? Executive Director Simon Young says that in recent years he has seen some critical factors come together. The key changes in the electricity and technology landscape include
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a tradable wholesale market, cloud based computing, and the rollout of smart meters. Utilise capitalises on these factors to bring increased value to businesses. Young brought on board investment and consultancy company Millennium Corporation, which has expertise in unlocking value and growing businesses, and together they set about defining the Utilise market, establishing the brand and systems, and providing support to the rollout. From the outset Utilise has designed its
services based on what businesses said they wanted from an electricity provider. It sees its ‘edge’ as the combination of smart meter technology with proprietary pricing software and a lean business approach. This proprietary pricing technology provides customised pricing for businesses based on their own usage profile, enabling its customers to receive our best possible energy price. The company’s leadership team is made up of industry experts and has translated the extensive research into what business customers said they want and need in a power company into the Utilise offering. “Unsurprisingly, businesses, often reliant on the security of power, yet without the resource of big industry, want competitive prices, good service and transparency in a power company’s pricing,” says Marcus Kohn-Taylor, General Manager of Utilise. Kohn-Taylor, who has experience in successfully establishing new entrant energy
“
Pricing used to be a specialised area. We have taken it out of the head office and put it on a tablet. Our sales staff can sit down with a customer and they can have full transparency of the costs, if they want it.
”
Marcus Kohn-Taylor, General Manager - Utilise.
PHOTOGRAPHY BY NIC STAVELEY
retailers in Australia and New Zealand, says there is a large opportunity in the small and medium business market. The Utilise system employs half-hourly smart meter readings to design a pricing structure that matches very closely the way businesses consume power. The web-based tool uses a customer’s usage profile, location and network costs, at their business premises or anywhere else. “We deliver customised pricing to the business consumer, but not just that, we deliver good engagement and service that caters to individual business needs. We like to think we are a breath of fresh air,” says Kohn-Taylor. Typically, wholesale power prices are lower during the weekend and night, and using the
smart metering technology, Utilise is able to pass on this cost-saving pattern to customers. Large energy retailers tend to charge a flatrate, 24/7, whether it is an off-peak or on-peak time, Kohn-Taylor says. “Pricing used to be a specialised area. We have taken it out of the head office and put it on a tablet. Our sales staff can sit down with a customer and they can have full transparency of the costs, if they want it,” he says. Starting a new electricity retailer isn’t an overnight business. Their team spent 18 months scoping, doing detailed designs and building systems with today’s solutions for tomorrow’s challenges. Utilise’s research into understanding small businesses’ attitudes to power, their retailer, switching, and what their ideal utility provider looked like revealed that 80% of those organisations who switched retailers thought it was easy. Of those who hadn’t switched, two thirds said they didn’t because they thought it was a hassle, or they were too busy. Over the last five years, the wholesale electricity hedge market has become more transparent and liquid, which means Utilise trades on a similar playing field to its larger competitors. Even though the company researched the market before launch, it realises it can’t be wedded to assumptions it had about the market. “If you find that market feedback is saying something different, you’ve got to be agile and modify what you are doing accordingly,” says Kohn-Taylor, “something we are capable of doing at pace”. The challenge the company has addressed is to be able to offer tailor-made solutions to customers, and then have the ability to scale it up. Young and Kohn-Taylor are excited about the possibilities ahead, armed with research and market analysis, and a well-developed customer offer. “You’ve got to earn trust, you can’t contract it.” And that’s exactly what this company intends to do. ½
Utilise.co.nz 0800 UTILISE [88 45 47]
JULY – AUGUST 2015 | IDEALOG.CO.NZ | 41
BUSINESS | Customer Centricity
It’s a war out there. Consumers are better informed, increasingly demanding and have more choice than ever before. Companies are being urged to use customer experience to set themselves apart. But making the shift to a customer-centric business requires a change, not just in processes but in attitudes too. And as Dr Jane Cherrington finds in her fifth report for The Briefing, it’s this crucial human element that will win you the war.
M I N D T H E GA P +
AMAZON CEO JEFF Bezos occasionally
leaves an empty chair at the conference table during staff meetings. He says it belongs to the most important person in the room: the customer. Bezos’ trick is a simple yet effective way of shifting the way staff might think of their customer – transforming them from an “end user” or number in a loyalty database, to an individual with desires, needs, preferences and opinions. It’s just one of the ideas that has worked for the Fortune 100 company, which is consistently ranked among the world’s most customer-centric companies and has seen Bezos regarded as one of the top CEOs globally. Designing business around the customer experience is a strategy that can tangibly improve the bottom line. It is a potential source of competitive advantage in a world where differentiators are becoming tough to achieve. At its heart, customer centricity is about reimagining your business from the customer’s point of view, working out what will make them want to do business with you and then putting that into practice. Seeing business from this ‘outside in’ point of view, with the customer at the centre, requires a » 42 | IDEALOG.CO.NZ
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BUSINESS | Customer Centricity
deep understanding of who your customers are. And that understanding has to seep through to the core of the business – its leadership, culture, behaviours, skills, and all engagement with customers. This is where the research suggests the critical gap lies. HAPPY CUSTOMERS SPEND MORE It aint rocket science that happy customers spend more money – but it’s nice to have it confirmed in the numbers. A Forrester Research study in 2013 put a monetary value on companies moving from a below-average score on its annual Customer Experience Index (CXi) to an above-average rating. The results were significant (see graph, opposite page) At the top of the scale, Forrester found US wireless service providers (which have traditionally scored relatively poorly in terms of customer service) could potentially make an additional $US1.6 billion in revenue if they upped their game, with the biggest gains coming from customers making additional purchases. Retailers could up their revenue by $US572 million, with almost half of that coming through a reduction in customer churn (when a customer ceases his or her relationship with a company). On the other side, a bad customer experience – particularly one which is unresolved –
correlates directly with customers deciding to change brands. Studies show a particular lack of loyalty among customers who have a poor experience but don’t complain – one in five of these quiet, uncomplaining folk will simply switch brands next time they buy. The trouble is that a dissatisfied customer might not say anything to you – but there is plenty of opportunity to moan online. Before the arrival of the internet, a dissatisfied customer would tell on average 10 people about their bad experience. With online communication that number increases roughly fourfold. On the plus side, satisfied customers will also communicate their experiences. And this word of mouth number counts because these days a significant number of customers have done their research elsewhere – using word of mouth recommendations, perhaps, or searching online – before they even get to your store/office/site. In the B2B (business to business) space, a survey by business insight company CEB found 57% of a typical purchase decision is made before a customer even talks to a supplier. FIRST STEP – YOUR STAFF Many companies struggle with adopting a customer-centric approach because their existing
What would your business look like with the customer at the centre? Knowledge = Success
Insights = Understanding
operating model, technology, infrastructure and (most importantly) people are aligned mentally with their product or services portfolio, not with their customers. To overcome these obstacles requires a shift in thinking. A crucial first step is to develop a shared understanding within the company of what is meant by customer centricity and the customer experience for your business. It helps to simply place the customer in the centre of thinking and planning (see below, left). Moreover, it’s important to remember many customers value interactions with an organisation as much as they do the products or services they offer. A useful model is one that asks: “How effective, easy, and enjoyable are we as a company to interact and do business with?” (See below, right.) ENGAGING YOUR TEAMS The quality of customer interactions is based on your people: how happy, proud or excited they are, how well informed they are, and how empowered they are. The role of the employee in delivering customer experience is critical. Employee experience is tipped by many in the to become as important as customer experience. Gallup’s State of the American workplace report suggests companies with highly engaged »
What customers want
“I felt good about that.”
“I didn’t have to ork hard.” work
Enjoyable
“I accomplished y goal.” my
Continuous Improvement = Value
Source: String Theory. 2015
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Reliability = Trust
Easy
Effective
Happy customers spend more Research suggests companies can make significantly higher profits if the experience they provide for their customers moves from below-average to above-average for their sector. Total annual impact ($m) $887
Wireless service providers (82 m*)
$694
$555 Airlines (80 m*)
$807
$368 $427
Credit card providers (61 m*)
$320 $380
Hotels (44 m*) $29
$237 $273
Retailers (67 m*)
Health plans (medical insurers) (20 m*)
Insurance providers (15 m*)
Car rental providers (35 m*)
Banks (15 m*)
TV service providers (17 m*)
Consumer electronics manufacturers (10 m*)
Investment firms (6 m*)
Internet service providers (16 m*)
$62
$2 $491 $188 $118 $21 $61 $254 $6 $81 $73 $7 $92 $47 $43 $40 $20 $59 $19 $7 $43 $13
Base: US online adults (ages 18+) who have interacted with brands in the past 90 days Source: North American TechnographicsÂŽ Customer Experience Online Survey, Q4 2013 (US) *Average number of customers per company in each industry, based on internal and external Forrester research
$1,638 $1,418 $825 $729 $572 $494 $328 $320 $161 $138 $102 $85 $55 Additional purchases Churn reduction Word of mouth
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BUSINESS | Customer Centricity
employees enjoy 147% higher earnings per share than their competition. The trouble is that typically, your employees are far more likely to be disengaged than engaged (see graphic, right). Locally, Mike Bennetts, CEO of Z Energy is recognised as an example of outstanding leadership in the customer experience field. His success can be put down in part to his attitude towards making staff part of the Z story. “We believe that if you want to be a world-class Kiwi company, you don’t just employ people, divide them into functional departments and tell them what to do. “Instead, you should give them a reason for belonging; the possibility of a bigger purpose than they imagined, and a hunger for the extraordinary.”
Happy at work?
ACTIVELY DISENGAGED
NOT ENGAGED
ENGAGED
Gallup research shows most of us don't care about our jobs. UNITED STATES & CANADA
18%
AUSTRALIA & NEW ZEALAND
16%
29%
54%
60%
WESTERN EUROPE
20%
PEOPLE POWER Employee centricity is identified repeatedly as a key piece of the overall puzzle when it comes to making your business customer-centric, yet there seem to be two regular challenges with
24%
EAST ASIA
SOUTHEAST ASIA
6%
14%
14%
26%
66%
12%
73%
68%
Employee Engagement. Gallup Global Workplace Report. 2013.
Mapping the customer journey. An increasingly common approach to understanding the customer experience is through journey mapping – a view of the mental and physical steps a person takes to becoming a customer. This can identify touch points that might affect how someone engages with a business. Here's how to do it:
5 3
7
4
2
1
Map the internal view of how you interact with your customer.
8
6
Map the customer context. Describe all touch points and relationships to understand the different forces you are dealing with.
Source: String Theory. 2015
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Map your main customer types by category in the form of ‘personas’. Describe their situation, motivations and the outcomes they are looking for.
Map the customer journey/s in the form of actions required to enable them to reach their desired outcome – from the moment of pre-consideration forwards.
Map the touch points they interact with on that journey – not only those in your business but more broadly – such as social media or peer group conversations.
Map your organisational touch points into their journey – people, processes, channels, communications – looking to highlight the key interaction points you have.
Under each touch point map the department or person directly responsible for that link as a key vertical.
Grade the importance of each vertical and give each a current experience score. On a scale of 0 (awful) to 5 (excellent) you should highlight views – rational and emotional – from different stakeholders. Traffic light the scores as 0 or 1 = red, 2 or 3 = amber and 4 or 5 = green. Rate views of customers, front line and back office staff and the leadership team. This step is critical. It will reveal problems that different layers in the business were previously not aware of. For example, the legal team’s decision to produce highly complex and detailed disclaimers may be a ‘red light’ for customers and sales staff, but 'green' for management and legal.
this. Firstly, senior people in the business rarely observe their own people in action – but need to if they are to understand the customer reality. The questions leaders need to be able to answer are: y How do your people actually treat your customers? y How do your customers feel about how they are treated? The second issue is engagement. As one local participant observed, “How the heck can you expect someone to go to the nth degree with a customer when they don’t feel like their employers value them?” UK bank First Direct made the courageous decision of letting its front line staff decide when to compensate complaining customers and how much to give them. The result? 75% of all complaints were resolved within 24 hours and the costs of recovery fell, because employees were able to resolve problems before they escalated into more serious – and more expensive – complaints. VALUE YOUR CUSTOMERS' TIME It’s also useful to remember that customers expect companies to value their time as much
as they do. An Eptica consumer survey late last year found: y 39% of customers spend just five minutes looking for information on a website before giving up. y 60% will hold for five minutes on the phone before hanging up. y 56% expect an email to be answered within four hours. y 44% expect companies to give them a response to their tweets within an hour. And, crucially, who are your customers communicating with? Your staff. TURNING IT OUTSIDE IN So why aren’t companies getting their customer service act together? There are three main reasons why businesses find customer-centricity hard: 1 / It’s about the ‘soft’ side of the business – people and emotions, not software, systems or products. 2 / It requires a whole new mindset – from ‘inside out’ to ‘outside in’. This is not simply about a new operating model, it’s about the psychology of how we think. It’s obvious that most of us think about
the world from our own viewpoint; switching to a ‘customer first’ worldview is difficult. 3 / The work requires investment – human, technological and financial – and it isn’t a process that will necessarily deliver shortterm improvements to the bottom line; the profitability gains are usually realised over a longer period. KEEPING UP WITH THE AMAZONSES Another major problem facing your average Joe Blow Business is that some companies do it so well – often by leveraging technology to deliver intimacy. Take Amazon, which last September filed a patent for its proposed ‘Bring it to Me’ service, in which drones will deliver your parcel to wherever you may be (not just your home address) using GPS from your smart device. Then there’s Dutch e-tailer Jeans Online which launched an ‘Easy Fit & Return’ home delivery service that gave shoppers 15 minutes to try on garments and then give any unwanted items back to the courier who brought them. This superior and more personalised experience is not being delivered in every »
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BUSINESS | Customer Centricity
industry, but the experience of it means customers now have higher expectations of all the companies they interact with. SO WHAT NOW? Developing a consumer-centric view of the world can be as simple as putting the word ‘customer’ into a job title. ‘Sales director’ becomes ‘customer sales director’, ‘product manager’ becomes ‘customer product manager’. Or it can be as complicated as overhauling databases so as to use the information we collect more strategically and insightfully. Data integration is a crucial aspect of
personalised customer experience and will only grow in importance over time. Research points towards a growing demand for personalised and customised experiences, and the more companies get better at using data to truly understand their customers, the more important personalisation and customisation is going to be. Meanwhile, data should be shared across different parts of a business, and data analysts should be proactive innovators, rather than report producers. Customers want you to know them properly, to understand them deeply, provide immediate responses and deliver quality results.
At the same time they’re less loyal, more powerful and more complex to deal with. This requires you to map into their networks and start conversations with them that help you respond to demand and opportunity. It might be time to bring that empty chair into the room. ½
This article is adapted from The Briefing report ‘Customer Centricity: If you don’t look after them, someone else will’. Dr Jane Cherrington is co-director of String Theory and research director for The Briefing, an Idealog sister brand. Find out more at www.the-briefing.co.nz
The three rules of customer centricity RULE NO 1: KNOW ME Customers expect companies to be using technology to deliver intimacy. A pizza joint fails when it consistently sends special offers for meatlovers’ pizzas to a vegetarian customer. Customers are used to Amazon being able to make sensible book suggestions linked to their past reading history. They won’t tolerate the pizza company not noticing that 100% of their previous online orders were for vegetarian pizzas. And the excuse that your backend system can’t link past purchasing with email specials won’t wash.
RULE NO 2: MAKE IT EASY FOR ME Customers expect it to be easy to connect with an organisation. That means fast response times, mobile-friendly transactions, having a
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presence on social media sites, and making sure you communicate with customers in a friendly and easy-to-understand way. British Telecom has introduced what it calls the “Net easy score”. And carmaker Fiat took easy accessibility to a new level when it introduced web-cam-enabled car browsing in Brazil. Showroom staff wearing head-mounted cameras can talk customers through a car they are interested in buying, answering questions and discussing purchasing options.
RULE NO 3: BE RELEVANT Customer drivers may be similar, but pathways to information and purchase, and methods of feedback and experience sharing have changed radically. So the ways companies interact with their customers need to reflect
that. Digital customers are using multiple channels to get information about products and services before they buy. For example, they might view a Facebook post, “like” it and click through to a link to that item, then progress to web chat with a query, and finally come back to the website to place their order. They might be doing everything on their mobile devices (smartphones and tablets). However, many businesses are slow to match their offering to the channels their customers are using. Whether it’s a mobile app or a responsive website, companies need to offer users a mobile-friendly option with the opportunity to click to call. 2015 is the year for companies to think about how to add channels to their service offering to meet consumer demand for choice.
In association with VMob
Things not things The Internet of Things holds huge promise for the retail sector, says Scott Bradley, Founder and CEO of VMob THERE’S NO ESCAPING the Internet of Things. The drive to connect is so hot right now that experts predict there will be somewhere in order of five billion connected devices on the planet by the end of 2015, exploding to 25 billion by 2020. But it’s not the Things themselves es we should be most fascinated with; it’s the hings massive amounts of data those things sonalized generate, and ultimately the personalized experience we can offer once we ns. understand what that data means. oT holds For retailers specifically, the IoT huge promise. 96% of retailers surveyed urveyed nnect by Forrester are preparing to connect he devices in order to personalize the shopping experience, improving service through technology, including: Installing beacons and pushing g hyperrelevant promotions to people as they get within range. Using radio-frequency identification fication ment (RFID) to track product movement ves the around the store – when it leaves shelves, where it goes next, how ow long it takes to get to the checkout, and the friends it picks up on the way. Installing smart displays to show ow different content depending on which RFID or smartphone comes into range (or sends content to it), and measuring which content is more effective, based on customer interactions. Flicking out notifications directing people who are stuck in a queue to the checkout that’s just opened, or inviting them to check out an offer, rather than waiting. Or getting rid of queues entirely; going mobile and letting people check out in the busiest areas of the store (naturally you know where those areas are – you’ve seen the heat map). At the centre of this retail Internet of Things is the customer’s mobile device, the single best source of real-time customer data. Almost everyone now carries a phone with them at all times, giving marketers access to a wealth of information, including location, social sharing, in-app activity and more.
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Combining this live marketing data with on- and offline customer data, information from external services (eg weather, traffic), and other connected devices lets retailers build progressively more sophisticated customer profiles and model shopper intent better than transaction data alone. I may buy a lot of ice cream, but if it’s snowing outside you’re more likely to win me over with an offer for hot chocolate. All this connectivity means retailers are generating really Big Data, the kind you can't analyse in a spreadsheet. At peak times, the VMob end-to-end personalisation platform processes around 5,500 activities a second, amounting to a massive 43GB of customer data per hour. By comparison, Paymark processed 155 payments per second on Christmas Eve 2014; further proof that transaction data is only a small part of the information brands should be collecting on customers. Solutions like Microsoft Power BI and Machine Learning analyse this massive stream of events in real-time, allowing for quick analysis and building predictive learning models. However, the real magic comes when you use these insights to predict intent; you know what your customers are going to do at any given time, so you give them what they need when they need it – a cup of coffee instead of an ice-cream on a cold day, or a discounted movie offer instead of a ticket to tonight’s game. The results of this real-time personalisation are immediately obvious and very measurable. Brands personalising content using the VMob platform have experienced up to 50% higher spend, 33% more visitors, twice as many store visits per person and a phenomenal 700% increase in offers redeemed. ½ VMob is an end-to-end mobile personalisation platform that lets retailers and other customer-facing brands create highly personalised marketing campaigns to reach customers at exactly the right time and place, to deliver a level of personalised content not possible with other media. www.vmoblive.com
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TECHNOLOGY | Data power
In the 2011 movie Moneyball, Brad Pitt plays Billy Beane, the general manager of the cash-strapped Oakland Athletics baseball team. Using a heap of previouslyignored player statistics, Beane buys up undervalued players no one else wants – and goes on to win the league. High-five for clever data. TEXT BY BILL BENNETT ILLUSTRATION BY TANE WILLIAMS
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THE MONEYBALL HYPOTHESIS ( that a data-driven culture produces
more successful companies) is increasingly being shown to be true – by statistics, of course. An Economist Intelligence Unit report: The deciding factor: Big data and decision-making, found companies making decisions backed by data perform 5%-6% better than those who make decisions backed by – well other stuff. Meanwhile, the same survey showed company performance improved 26% over three years when big data analytics was being used. Think Amazon or Facebook. A separate EIU report suggested top-
performing companies are more likely to be good at using data; low-performing ones are likely to be bad at data stuff. In many ways, the oft-touted “information age” has been a long time coming. But after a lot of false starts and trillions of dollars, we finally got there. Today businesses depend on computers sifting through vast piles of data. They delegate decision-making to algorithms that choose what to buy and sell, who to trade with and so on. The key that turns raw data into information is analytics. It’s a discipline that’s been around since computers used punched cards, but » today’s vast data lakes make it newly
TECHNOLOGY | Data power
relevant. Data analytics is hot and has already had a profound effect on business, healthcare, science, entertainment and government. Much of the noise surrounding data analytics focuses on what happens at the big end of town, where corporations and governments deal with vast quantities of information. That’s a discipline in its own right known as big data (see page 54). Michael Whitehead is CEO and cofounder of Wherescape. In his words, the Auckland-based business “is 100% about analytics”. While he is wary of the term big data, describing it as “largely a supply-side phenomenon”, his company is recognised as a global player in the data space, with ambitions to challenge large IT incumbents like Oracle and IBM.
Six ways anyone can climb aboard the analytics train
SO HOW DO YOU GET TO BE A DATADRIVEN COMPANY?
“TOO OF TEN NEW ZEALAND COMPANIES ARE STUCK WITH THE IDEA OF HEROIC DECISION MAKING WHERE THE BRAVE CEO GOES OUT ON A LIMB. THEY’RE NOT LOOKING TO USE DATA AS A DIFFERENTIATOR.” MICHAEL WHITEHEAD, WHERESCAPE
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1
PERSONALISE SERVICE
Old school shopkeepers collected data in their heads while working behind the counter. They’d remember if a customer expressed a product preference and make sure to order enough in to tempt them the next time they were in store. That personalised service made for loyal and profitable customers. Modern business owners can use technology to do the same thing on a grander scale. The key is to find ways of gathering data without alienating customers. An obvious way to do this is with loyalty cards, where customers are rewarded for handing over information. Just don’t ask for too much at first, no one likes form filling. Another popular technique involves getting customers to ‘like’, say, a Facebook page in
return for entering a competition. You’ll need to make sure they agree to the right permissions, but armed with that information you’ll be able to gather personal data about them along with access to their posts about their lifestyle choices and interests.
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BENCHMARK
Corporations spend hundreds of millions buying expensive ERP (enterprise resource planning) systems to get an insight into their business operations and potential opportunities. Small business can buy something similar for a few hundred dollars a year from, for example, 9Spokes (www.9spokes. com), an Auckland-based cloud app integrator. 9Spokes directs companies to appropriate
PHOTOGRAPHY P PHOT OGRAPHY BY NAME HERE
Whitehead says companies should look to their own resources first. “You get the biggest bang for your buck when you dig into the data you already have. It could be customer data or transaction data. A telco will have call records, a retailer will have sales records and an airline knows who has flown where. This is all something no one else has. “Big data starts when you add in external data. A classic example might be to use sentiment analysis taken from what people are saying on Twitter. There’s value where that intersects with your own data.” Whitehead says New Zealand companies are up with the play when it comes to using big data, but are behind in »
cloud apps, sells them, then integrates the apps into a dashboard that gives owners and managers a one-stop overview of their business. The most obvious advantages of this approach are one invoice for everything and a single sign-on. Users don’t have to log in and out of various cloud apps all day. This model gives 9Spokes access to data from lots of companies and that allows for a feature it calls peer tracking. In effect you get to see how other companies in your sector are performing. The data is aggregated and made anonymous so a customer can’t identify a rival’s performance. If, say, you run a café, 9Spokes’ peer tracking can tell you how much business was up or down at the other cafés in your town over a long weekend. Benchmarking performance in this way is a powerful tool for planning and improving a business.
Armed with timely information, companies can automate, or nearautomate responses. The player in any market with the fastest reactions to changing conditions has a solid competitive advantage.
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TURN YOUR DATA DIRECTLY INTO MONEY
If there’s a digital component to your business, you may have an opportunity to gather data that has value to larger companies. It’s legally tricky, not to mention morally suspect, to sell customer names, addresses and personal information without their permission, but there’s nothing wrong with providing non-personalised trend data that gives buyers insights into local preferences and patterns. This is something mobile phone companies are starting to do. The phone network knows where phones are and how fast they are moving. So they can tell, for example, if there’s a traffic hold-up at a bottleneck. There’s no need to give away any individual user’s information. A radio station might be prepared to pay
gather traffic information it for this data to gath listeners, for example. Or can broadcast to lis GPS companies might mig want it to route their customers around the t jams.
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START WIT WITH WHAT YOU ALREADY H HAVE
It is fashionable fashiona for organisations, especially those dabbling dab in big data, to link sourc some of which is disparate data sources, unstructured, to get new insights. That can be rewarding but it’s a lot of hard work. Experts say comp companies often want to leap pr in with ambitious projects long before they’ve exhausted the analy analytical potential of the structured data they are sitting on. Using clean ha is likely to deliver results data you already have faster and cheaper tthan any other approach.
5
YOU MAY A ALREADY USE BIG DATA
If you have a web site and you use Google Analytics Analy or Google Ads then dabb you’re already dabbling in the world of big data. You never download dow the vast quantities of data needed to u use the tools, nor do you have to handle the n number crunching, that’s all done for you by rremote cloud servers. Google Analytics is a small taste of the big data world that you can use to learn how your customers respond resp to offers and the way presente to them on your web site. things are presented You can also get use useful information about where your custom customers live. Goog Ads provides tools to Meanwhile Google help you discover w what keywords potential customers are using to find the goods and products you sell. It calls on the billions of enquiries users type into Google’s search engine every day.
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MINE SOC SOCIAL MEDIA
Spark’s network netw operations centre is a high tech system monitoring the performance of fixed-line, mobile and broadband services. services Yet one of the most mo visible screens on the wall in front of the team t shows Twitter feeds following all the ma main telecommunications companies. It’s usually usu where engineers first learn of a major problem. pro You can do the same sa with automated tools set up to watch you your customers and your rivals. You’ll get early insights insig in to what people are buying and what th they don’t like about your, or your rival’s, business. busines
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TECHNOLOGY | Data power
MICHAEL WHITEHEAD, WHERESCAPE
their big picture thinking. “Too often they are stuck with the idea of heroic decision making where the brave CEO goes out on a limb. They’re not looking to use data as a differentiator.” The roll call of New Zealand companies that Whitehead says do see data as strategic reads almost like a list of the brightest tech stars. He names Xero, Orion Health, eRoad and Wynyard Group. “Xero is starting to put data at the core of its business. Orion’s IPO was all about data. eRoad never talks about anything but data. “Data is particularly useful when it comes to changing customer behaviour. This is something supermarkets like Countdown do badly with their customer cards and discount vouchers, but that telcos do really well.” Whitehead singles out Spark as a New Zealand company doing interesting things with its own data. Last year Spark Digital Ventures formed its own data consultancy: Qrious. One of its first customers was another Digital Venture business: Skinny Mobile. Qrious helped Skinny learn which add-on products sell to which customers, what plans and offers draw in new business and what does and doesn’t work in the businesses’ retail outlets. Skinny shows you don’t have to have a billion dollar turnover to make data work for you, Whitehead says. The business is run on a tight budget and doesn’t have much in the way of internal staff or computing resources – before hiring Qrious it was using Excel to sift through data. ½ 54 | IDEALOG.CO.NZ
Big data There’s data and there’s big data. Cynics will tell you the latter term is just another buzzword designed to help technology companies sell systems to large companies. There’s a grain of truth in that idea. In 2013, Gartner, a technology industry research business, told subscribers big data had moved through the hype cycle from the “peak of inflated expectations” to the “trough of disillusionment”. That, by the way, isn’t as awful as it sounds. The next step on Gartner’s cycle is the “plateau of productivity”. Yet when “big data” first appeared it had a specific meaning. It was the name given to dealing with amounts of data far greater than the processing capacity of everyday systems. Moreover, the implication is that when you have these vast amounts of data, you can get new insights that would be impossible to uncover by traditional means. If there’s too much data for conventional computers and storage devices, or if it moves too fast, or is disorganised, then your project qualifies as big data. And that means you’ll need to find ways of dealing with it that go beyond conventional database technology. One of the best examples of the use of big data is seismic exploration for energy exploration. It’s the sort of thing that New Zealand crown research institute GNS Science (previously Institute of Geological
and Nuclear Sciences) do a lot of. Basically, seismic waves (the same tool used to study earthquakes) are sent deep into the ground, from a huge truck or a boat, and the reflected wave field from each rock the wave hits is recorded at the surface by sensors. When you've got regular echo explosions coming out of each of a group of exploration boats 24 hours a day, that’s one hell of a lot of data. The trouble is, as the GNS experts know all too well, the more accurate the image you get of all that stuff underground, the more likely you are to find some oil or gas. So the more GNS’s ability to deal with large datasets increases, the more their customers keep piling on the data. One of the problems for a lot of companies is that the data flow isn’t even – sometimes you have nose-bleed high peaks in the information coming in, sometimes it’s just a drop or two. However, dealing with the peaks and troughs doesn’t necessarily mean buying expensive hardware. You can buy computer power on an as-you-need-it basis from cloud computing companies. Still, this is often a pricey part of the big data equation: the skills to organise, analyse and interpret complex projects are rare, so the practitioners get to charge accordingly.
PHOTOGRAPHY P PHOT OGRAPHY BY NAME HERE
“DATA IS PARTICULARLY USEFUL WHEN IT COMES TO CHANGING CUSTOMER BEHAVIOUR. THIS IS SOMETHING SUPERMARKETS LIKE COUNTDOWN DO BADLY WITH THEIR CUSTOMER CARDS AND DISCOUNT VOUCHERS, BUT THAT TELCOS DO REALLY WELL .”
The dark side of analytics
Three characteristics separate a true big data project from everyday data: volume, velocity and variety. VOLUME is the amount of data. Having vast amounts of data is the key point. With more data, analysts can build better models to understand whatever they are looking for. The idea is that if you forecast, say, market conditions, comparing 400 data points will give you a more complete handle on where things are heading than just comparing five data points. While that’s true up to a point, the old “garbage in, garbage out” rule still applies. Companies typically collect vast amounts of data that are difficult to store and move using everyday tools. This often includes internally generated data. A phone company might have databases on customer calling patterns and so on. However it doesn't have to restrict analysis to its own data. It can buy databases from external agencies, or sift through social media databases pulling out publically available tweets or Facebook posts. VELOCITY: The rate at which data is generated and captured is important. Companies need timely information. Real time or near-real time processing means a marketing campaign can be changed if, for example, there’s a negative response to an early advertisement. An online retailer might start gathering data when a customer enters the website and be able to cook up compelling offers to squeeze out more dollars before they get to the checkout.
Real time or near-real time processing means a marketing campaign can be changed if, for example, there’s a negative response to an early advertisement. An online retailer might start gathering data when a customer enters the website and be able to cook up compelling offers to squeeze out more dollars before they get to the checkout.
It’s also important to have up-to-date competitive information. Armed with timely information about a rival’s initiative-winning business, companies can automate, or near-automate responses. The player in any market with the fastest reactions to changing conditions has a solid competitive advantage. VARIETY: Data isn’t always nice and tidy. Big data typically pulls information from structured and unstructured sources; they can be messy. Think of extracting information from tweets, Facebook updates, blog posts, online comments and video, as well as conventional relational databases. Increasingly, data is also collected from connected devices such as smartphones, smart electricity meters or embedded sensors. That’s only going to increase as more and more devices are connected to the internet. Some big data boffins add a fourth V: Veracity. This comes down to the trustworthiness of the incoming data. Traditional database technology works on the assumption the data is clean, precise and accurate. That’s often not the case with the material collected for big data projects. A Twitter user complaining about a product and tweeting their intention to stop doing business with a company might not be telling the truth. It’s possible for rivals to pollute data, something that’s hard to spot when you’re moving fast.
“The amount of data being collected today is insane,” says Andy Prow, chief executive of Wellington-based Aura Information Security. “We’re able to collect volumes that simply weren’t possible in the past. Last year we heard the NSA (the US National Security Agency) is tapping into all voice and data traffic.” Prow’s business provides high-level security consultancy to governments and corporations around the world. The work includes helping companies protect and secure their data by penetration-testing security from the outside. Among other things this can involve ethical hacking: that’s breaking in and stealing their data in order to find the vulnerabilities. Prow says the amount of data being collected by government agencies mirrors what is happening in the business world. “People carry phones which contain business apps that might have access to financial information. They have email, messaging, contact books and health apps. Those phones know everything about a person, they even know how much you walk and what speed you move at, they know how you drive.” He says the thing about this is that people happily hand over that information when they give phone apps permission to collect data. On the whole that’s not a problem. “The little pieces of data don’t matter much on their own. The problems start when big data starts pulling things together and reaching conclusions,” Prow says. The classic illustration of how troublesome this can be is the story of a US teenager who was sent a promotional brochure designed for expectant mothers by US chain store Target, which had been monitoring her purchasing behaviour according to their (accurate, in this case) algorithms. The trouble was that until that point no one in her family had any idea she was pregnant, and the girl’s father came storming into the store demanding why his school-aged daughter was getting baby stuff in the mail. The algorithms had drawn the right conclusion and the automated system acted as expected, but Target was left with egg on its face and, one suspects, an ex-customer.
JULY – AUGUST 2015 | IDEALOG.CO.NZ | 55
Healthcare by design How a bunch of design students is disrupting life at Auckland Hospital TEXT BY DEIRDRE COLEMAN AND NIKKI MANDOW
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AUCKLAND CITY HOSPITAL is like a city within a city. Every week, 60,000 people enter (and with any luck leave) this rich and complex environment. It’s clean, off-white, sterile, efficient – as it should be. Then unexpectedly in the middle of level five sits a surprising space – exposed pipes, rough whitewashed walls, where the paint peters out half way up, concrete pillars enveloped in tacky carpet. It’s looks like a services area, or the bit they forgot to finish. Actually it’s the Design for Health and Wellbeing Lab – a collaboration between AUT University’s design department (hence the trendy, half-completed look) and the Auckland District Health Board.
Here design students of various hues (graphic, industrial, product, even fashion; post- and undergraduate) sit at tables they probably knocked up themselves. And using anything from post-it notes to top-notch 3D printers, they try to find design solutions to the problems faced by patients and staff in a hospital environment. For example, how to produce an IV drip pole that is less scary for children. Or make a radiation treatment protection process that’s more practical. Or develop an Emergency Department navigation plan that makes it easier for patients and their families to know what to expect when they turn up at A&E. Dr Stephen Reay, senior lecturer of industrial design and innovation at AUT University, started thinking about the possibility of linking
PHOTOGRAPHY BY DEINIKA ELSTON
DESIGN | DHW Lab
Design for Health and Wellbeing Lab: Stephen Reay (black shirt, shaved head) and Justin KennedyGood (blue shirt, bearded) at the official DHW Lab opening
students with the hospital four to five years ago. The first step saw design students working on a series of small practical projects for the ADHB. But Reay wanted more – a design lab within the hospital. He teamed up with Justin Kennedy-Good, the ADHB’s programme director for performance improvement, and together they set up trying to make it work. When they came across an empty space on level five of the hospital, next to the Clinical Education Centre, they quietly moved some students in. “We said we’d be in there for a couple of weeks and then we just stayed.” Twelve months later, the DHW Lab – a world first – already has 90 post-it notes on the ideas board waiting for action – and a dozen projects on the go.
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The staff who work here have said ‘This is hairy, loose, rough and experimental.’ And I’ve told them: ‘It’s yours. What do you want to do with it? It’s your opportunity. This is a once-in-alifetime.
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Stephen Reay, senior lecturer, industrial design and innovation, AUT University
While the medical profession is historically rooted in science, complexity and expertise, design is viewed as much more intuitive, creative and haphazard, says Reay. By bringing the two worlds together, with the freedom to experiment and innovate, the DHW Lab gets designers engaging with clinical experts to share and test ideas and develop solutions.
“In the lab, we’re balanced on a knife edge, and from that tension comes innovation,” explains Reay. “We’re learning enormous amounts from the interdisciplinary collaboration we have with the hospital’s performance improvement unit, and from the clinicians, support staff, patients and families.” JULY – AUGUST 2015 | IDEALOG.CO.NZ | 57
DESIGN | DHW Lab
THE SPACE The space itself, with its temporary, unfinished, experimental feel, is an important part of the design lab experience, Reay says. “I like that the emphasis is on the work, not the look. We started with a small budget and we’ve designed it as we’ve gone along, making half of the furniture ourselves. The space itself is changing as we have better ideas – like it’s a prototype for what a design lab in a hospital should be.” As befits a hub, it’s an ever-changing community. There are design graduates working on a range of projects from pharmacy layout, to the effectiveness of the transition lounge, to the outpatient experience in the Starship Children’s Hospital. There are undergraduates doing work experience, and post-graduate students working on real-life projects. There is work for spacial designers, product designers, even a fashion design student working on a new uniform for the volunteers. Kennedy-Good says one goal of the lab is to get hospital staff exposed to a creative way of working. “We want our 8000 employees to be constantly thinking about what they can do differently to improve the experience for 58 | IDEALOG.CO.NZ
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We bring [management from companies like Air New Zealand and BNZ] through the lab and they say, ‘Holy crap, I wish we had that.’ And we did it in a public system – that's pretty cool.
Justin Kennedy-Good, ADHB programme director for performance improvement
patients, and to have permission to try stuff and learn from it – with all the safety and context that’s required,” he says. Over the past few months, there have been visits from management at companies like Air NZ and BNZ, keen to look at the continuous improvement model, says Kennedy-Good. “We bring them through the lab and they say, ‘Holy crap, I wish we had that.’ And we did it in a public system – that’s pretty cool.” LEARNING ON THE JOB On the other side, it’s also a hands-on student learning environment. At any given time, a handful of AUT postgraduate students are developing their design projects, alongside graduate designers working on specific projects and mentoring the students. “I hope that by attracting students with the right mindset and giving them this
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opportunity to step up, we’ll help them leave us more confident and motivated, and as better designers. It’s a very different sort of education. The organic nature of the lab’s growth has made it interesting and exciting, Reay says. “Potentially it was a huge risk, but at the same time it wasn’t, because it’s such valuable learning whatever way you look at it. Everything here is a huge experiment and we’re just working it out. “The staff who work here have said ‘This is hairy, loose, rough and experimental.’ And I’ve told them: ‘It’s yours. What do you want to do with it? It’s your opportunity. This is a once-in-alifetime.” The future of the lab is uncertain, Reay says, and that’s how it should be. “We won’t stay forever, we’ll move somewhere else or hopefully one day there’ll be no need for us because then the hospital will be awesome!” ½
MIND ALTERING
SUBSTANCE
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allaghan Innovation, vation, in association with Project usiness NZ, presents an exclusive Connect and Business n briefing with world-renowned Breakfast Inspiration author, sought-after business strategist and entrepreneur, Salim Ismail.
The Future of your Business ness We are in the midst of a business transformation that hasn’t been ears, mainly driven by disruptive technologies seen for one hundred years, ever, our organizations are still linear: they and globalization. However, or an era of economies of scale and relative evolved a century ago for ity. stability and predictability. el, the ‘Exponential Organization’ that leverages It’s time for a new model, y and abundance in a new way - the future will be owned openness, transparency siness. by this new breed of business.
Salim Ismail, Author ‘Exponential Organizations’ Founding Executive Director, Singularity University
artup with these principles? How could you apply them to How can you build a startup " +PX DBO ZPV SFUSPŃU UIFTF JEFBT JOUP MBSHF B NJE NBSLFU DPNQBOZ" +PX DBO ZPV SFUSPŃU UIFTF JEFBT JOUP MBSHF organizations? w to harness cutting edge ideas and how the acceleration Salim’s insights into how es will transform business are mind-blowing. of disruptive technologies Don’t miss this once in a lifetime opportunity to understand the implications of these breakthroughs - on both business and society - and see what is over the horizon.
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he best-selling business book ‘Exponential Organizations’ Salim is the author of the tive Director of Singularity University, located in the and the founding Executive heart of Silicon Valley att NASA Ames. Singularity University is focussed on creating global impacts through cutting edge programmes that inspire and n of leaders to create new futures. inform a new generation
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Invested in design Business runs on money, whether we like to admit it or not, and finding investors is a challenge that many businesses face at different stages of their life cycle. Well designed communication programmes can help businesses attract, and retain investors, writes Insight Creative CEO Steven Giannoulis. MOST BUSINESSES, somewhere in their life cycle, will need to raise capital to get their business idea off the ground, to expand into new markets, to develop new products or to address business continuity challenges. Sometimes this is as simple as putting a business case together to get a new bank loan approved. Other times, a fresh injection of investment capital is needed and this can be a completely different challenge. Investment decisions are driven as much by sentiment as they are by rational indicators like financials, ratios and forecasts. Investors assess the potential future value of an investment opportunity and the likelihood it will be achieved. They invest in the promise, or hope, of some future benefit which may be more than just a financial return. And this is where good design helps businesses attract investors. It’s all about telling stories that appeal to investors’ hearts and minds, create engagement and drive action. For some, especially professional investors, the investment story is a rational calculation about the risk/return trade-off. Here good
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Good design appeals to hearts and minds, creates brand engagement and drives investor action.
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design allows information to be ordered and connected in logical ways that make sense to this way of thinking. For others, the investment assessment involves the creation of value at a much more human level. Photos, video and case studies, for example, help build emotional connections between real human problems facing people and society, and the solution a brand offers. Investing is complicated and regulations require a considerable amount of information to be presented to prospective investors. Visual approaches help simplify complex concepts, connect ideas and present information in bite size ways that audiences can digest. Infographics, for example, present traditional ratios, percentages and trends using simple graphics audiences can relate to. Let’s look at how design may help business at different stages in their evolution: STARTING UP New ventures represent the highest level of risk (and expected return) for investors, as they are often new entities working with new products and markets. Payback may also take time, as short-term gains are reinvested to fuel further business growth. Engaging potential investors in the underlying product, concept and people behind it, allows decision making to move beyond the risk and return equation. I recently purchased a small holding in a company developing a transport App. I reviewed the initial offer material and thought it sounded OK. A few weeks later, they sent me a link to a video they’d made. It made the underlying problem personal and showed me how their ideas would help solve it. Immediately, I was able to see the benefit to me and the growth potential of the idea. I saw first hand who the people were, building a connection with the brand, and the idea, at a human level. It quickly became “I can help make this happen”, so I invested. TAKING OFF In our business, we do a lot of IPO documents. Often it’s companies that have grown quickly and now need further capital to take that next step. Many have been around for a number of years but few people outside the company know what they do, what they offer and what they stand for. Wynyard Group, Vista Entertainment, IkeGPS and Serko are just some examples where we used a visual brand
story-telling approach to engage investors and explain the businesses clearly. As a result, they exceeded their investment targets. For capital raising efforts by entities like Mighty River Power, ASB and Precinct Properties where the brand is established, we used design to simplify complex offers and to reinforce key messages. MAINTAINING MOMENTUM Once you’ve attracted investors, the challenge is keeping them invested through the inevitable poorer performance times. An engaging investor brand story builds context, allowing short-term actions (and results) to be assessed with longer-term strategy and potential returns in mind. Engaging investors on an on-going basis is also about communication relevance. That 80-page annual report many companies insist on doesn’t meet the timely and relevant needs of professional investors and is too complex for most mum-and-dad investors. A welldesigned investor communication programme allows key messages to be dialled up or down for the rational/emotional needs of different audiences and for different channels. AND FINALLY - EXIT Our business, of Gen X owner-managers, will need to find new owners (hopefully with very deep pockets) to continue our legacy when the time comes for us to retire. Fortunately, we have the skills in house to create an engaging story-telling offer that attracts the right sort of buyers. ½
IN BRIEF This is the third in a series of articles highlighting how good design thinking can address problems and opportunities facing businesses. Insight Creative is a design communication agency that has been helping businesses achieve their business goals for nearly 40 years. They specialise in brand, digital, environmental experience, marketing and investor communications. www.insightcreative.co.nz
Steven Giannoulis is CEO & Strategy Director at Insight Creative. steven@insightcreative.co.nz
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INNOVATION | New product development
THE NEXT BIG THING Coming up with a great idea and translating it into a marketable product is one thing. But with everyone screaming for ‘fresh and new’ you can’t remain a one-trick pony. Deirdre Coleman looks at why even successful companies need to innovate. And, more importantly, how to do it. ILLUSTRATION BY GREG STRAIGHT
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SOMETIMES IT SEEMS your competitors are launching a new product every month. There they go again with a new flavour, a clever new accessory, a why-didn’t-we-think-ofthat solution, or a perfectly timed response to the latest trend. Meanwhile, you’re focusing on keeping the business running. You have a few ideas floating around, but no time or resources to develop them into anything. Do you really need to jump on the new product development bandwagon when demand for your existing offering is still strong? Absolutely, says Spark Ventures boss Rod Snodgrass. Speaking at the recent IdealogLive networking event, he gave businesses four years to disrupt or fail. Better by Design coach and new product development (NPD) consultant Saskia Van der Geest agrees. She’s spent 15 years helping companies – from Fisher & Paykel Healthcare and GE Plastics to small startups – launch new products into the market. »
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“New product development is essential,” says Van der Geest. “In some industries you need to do it because the market or your customers are asking for it. In others, it’s vital just to stay relevant. NPD is what keeps you relevant and ahead of the competition. And, when it’s done well, it also brings in new revenue streams.” She says in the food and beverage sector there’s an expectation for companies to bring out new products every six months. “The retailers ask for fresh new things and it’s often driven more by them than by the consumers. New products are new news, and from a sales perspective it’s a lot easier to approach a client with something new.” Innovation and NPD also serves to invigorate your company from within, says Van der Geest. It helps retain the best and brightest staff because it’s more exciting to work for a company that’s doing new things. GLOBAL COMPETITION Craig Armstrong from New Zealand Trade & Enterprise (NZTE) also has a long track record of helping companies develop and commercialise new products. Today, he leads an NZTE team advising 222 businesses in the agritech, biotech, food and beverage, and retail spaces with a focus on export markets. The way we do business has changed substantially, he says, and innovation is critical. However, some of the same old principles for business still apply. “What’s changed, and what causes a reframing in many cases, is the fact that New Zealand as a country – and many businesses – have become more globalised. “For Kiwi businesses, there are still many untapped markets and channels. Most companies have little exposure to that global market, and new markets open up every day. Can you just keep doing what you’re doing? Sure, for a while. But global competitiveness means you need to innovate and focus on emerging trends to stay relevant. That can be both about moving away from your core product, and expanding within that area.” Armstrong says Kiwis frequently get stuck on one good thing. “We can commercialise a single idea very well, but it’s how to get the next idea or competing options and ideas that’s often more difficult for us. “We’re quite mono in terms of our culture and perspective and our connectedness to markets. It’s only more recently that we’ve started to embrace a different kind of diversity.” 64 | IDEALOG.CO.NZ
Making it happen New product development projects are generally managed by a variation of one of two different processes: StageGate development (a term coined by author and innovation thought leader Dr Robert Cooper, and also known as phasing); and “learning first (or lean) product development” (LFPD). THE STAGED MODEL Around 80% of companies adopt the Stage-Gate process. In a nutshell: you come up with an idea, develop it into a concept, test the concept, and out of that comes a prototype, which you take through to production, launch and distribution. Most New Zealand companies use a version of that process and few do it by the book as Cooper intended, Saskia Van der Geest says. She likens it to building a house, where a landowner might approach a designer, ask for a concept drawing and if they like it, pay to have the design detailed further. “The gate idea is to control the quality, making sure you’re still OK with the scope of the work, the timeline and budget. That’s the intention of Stage-Gate. In reality, companies do this part on the basis of a checklist – have you done this and this? Yes. Then we can go on. “But problems crop up when no one asks: are
we all comfortable to go to the next phase? Have we got the knowledge to move to the next stage? Typically, there are a couple of engineers who would say ‘I don’t think we should go on, we’re really missing something’ but they’re not being asked and so the project moves forward.” LEAN PRODUCT DEVELOPMENT “Learning first product development” (LFPD) – also called “lean product development” – is a newer approach, where the goal is to test first, then design based on what works. When the Wright brothers were working on their flying machine, for example, they started by really understanding the critical pieces of the puzzle – lift, balance, drag, propulsion etc. Only after that could they design a plane that flew, Van der Geest says. Armstrong believes the learning-first model is the best approach for most NZ companies. He reommends spending the bulk of the development time on understanding customers and markets, and collecting insights to test and break that understanding – or add value to it. Only then should a company bring those learnings together with a new design. “Focus on doing as much as you can up front before you start costing your organisation serious production and material time. If you’ve done all the observation you can and you’re trying to generate different options and ideas Continued on page 66
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WHEN PRODUCT INNOVATION GOES WRONG Misapplied innovation and over-diversification nearly destroyed Lego. The story is a good lesson in what happens when new product development and financial insight don’t go hand in hand. It’s the world’s largest toymaker and one of the top 10 most recognised brands in existence; but just a decade ago Lego was on the brink of bankruptcy. Dane Ole Kirk Christiansen founded the family-owned company in 1949. Today, it still uses decades-old injection moulding technologies to make its plastic bricks. Compatibility is key – any Lego brick manufactured since 1958 can be combined with any Lego set on the market. In the 1970s, the introduction of Mini Figures unlocked the brand’s true potential. Not only could children build things, they could use the characters to act out stories in their imagination. But as the new millennium dawned, Lego’s growth flattened off. Children had less time to play, digitalisation was exploding into their lives, and competitor brands introduced an influx of construction toys. Lego responded by shifting its focus, diversifying into theme parks and clothing, and creating its own in-house digital games capability. While these were all massive new consumer
markets and a great opportunity to expand the Lego brand, executive vice president John Goodwin says this innovation-led expansion was characterised by an absence of financial insight around the decision-making table. Despite a subsequent growth in sales, profit did not follow suit, and a massive amount of underlying value was destroyed. While each new innovation in itself made sense, no one was looking at the overall impact on the company. “The company failed to capture the cost of complexity that was being introduced as a consequence of the innovation,” he says. “What wasn’t being picked up was the deterioration in asset utilisation and the fundamental shift in risk profile linked to this new strategy. “Financially, Lego was being managed through the rear-view mirror so there was no awareness that they were approaching a bankruptcy cliff.” In late 2004, new CEO Jorgen Vig Knudstorp brought a new level of financial vigour. “It was a classic turnaround situation,”
says Goodwin. “They sold off non-performing assets, refinanced the company straight from the balance sheet, refocused on core activities and started to listen to what consumers really wanted out of their Lego products.” By 2008 Lego’s leadership had reset the company onto a solid footing for growth. Over the last decade, thanks to well-applied innovation, the company has quadrupled sales and generated 10 times more profit than it did 10 years ago. Of the 300 new products Lego produces each year, 60% are new to the market. Goodwin says the finance team now works closely with every player in the innovation chain to understand how R&D, manufacturing and marketing translates into sales, and activity on shelf – and how consumers use Lego products. “They’re in a much better place to assess new innovation and how it will either enhance or detract value from the company’s total proposition. It’s crucial to get beyond the big idea and see how we can create a valuesustaining impact for the company.”
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and do some initial designs, you want to fail then – before you take it into a development and testing stage where you’ll be using factories, workshops and people.” RESEARCH RULES Market research is the key part of this earlystage process, but one New Zealand companies with a strong operational or entrepreneurial mindset often skimp on, says Armstrong. “They just push an idea or a product they’ve got out into the market in the hopes it will satisfy a willing and ready market,” he says. “That’s often not the case.” Consumer research is about visiting your markets, hanging out with your customers and getting to know them, and talking to your suppliers and distributors. “Companies underestimate the importance and the cost of market research,” says Armstrong. “It’s never a single trip or as easy as buying a report. Those kinds of activities require time in market, time in grocery aisles, if it’s a food product, walking around factory floors or the corridors of businesses to observe how people use a product, talking to operators and handlers, and different types of customers who might make the decision to purchase the thing in the first place.” Listen, communicate and build relationships is the overriding message. “If there’s one principal in business, it’s always the same: listen more than you speak,” says Armstrong. “While I was at Cadbury, we made sure all the people involved in NPD and marketing went into people’s homes to see how they prepared lunches in the morning and how they treated themselves and family during the day; and into schools to see how the kids ate their lunch in the playground, how food was traded back and forth, and what teachers thought about the snack choices kids were making. It’s that kind of immersion and empathy that has to happen, whether you’re B2C or B2B.” Van der Geest agrees. The more people in the company that are tuned to the consumer, the more successful your project will be, she says. “It’s not just your marketing team; everyone in the project team should be able to describe the customer, who they are, what they like or don’t like and why they want things a certain way.” Don’t forget your distribution and supply chain, Armstrong says. “If your distributors are hearing messages from retailers about why something isn’t selling or why a competitor is stronger, you definitely want to know that and build it into your evaluation process.” While there’s no substitute for being in 66 | IDEALOG.CO.NZ
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Consumer research is about visiting your markets, hanging out with your customers and getting to know them... It's never a single trip or as easy as buying a report.
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market, there are other useful channels for gauging consumer preferences, market trends, learning what your competitors are up to, and gleaning insights into unmet demand. “Every company can use social media to tap into their customers,” says Armstrong. “Jucy, for example, has done this extremely effectively. “You have to think as broadly as possible. In the food industry, my reference points are as much nutritionists and chefs, as they were once consumers and shoppers. PROTOTYPING A key element of the learning-first process is fast, cost-effective prototyping so you can take your concept to your customer for their feedback and then refine it. Van der Geest says prototyping
needn’t be expensive at all; in fact, you can do with Post It notes, duct tape and stick figures. “Especially in FMCG market, I see prototypes that look almost like the real finished product. They have amazing detail and fantastic quality but that’s missing the point. People see you’ve put a whole lot of time into it and they’ll say ‘Oh it’s pretty’ or ‘I don’t like blue so much’. That sort of feedback isn’t valuable. If something is very basic, they see it took you five seconds to put it together, and they’re way more responsive and happy to comment and give valuable feedback.” NURTURING INNOVATION Van der Geest says company leaders need to be realistic in their expectations, have a good overview of what’s going on, and create a working environment and processes that facilitate innovation. “Some CEOs just want faster, better, cheaper. They expect their teams to develop these new products at quicker speeds, better quality and for lower cost, and to do it consistently with an early indication of their return on investment.” Sorry guys, but the most likely outcome to that approach is burnt-out staff.
NEW BEERSIES Faced with a radical decline in New Zealand beer consumption in the last quarter century, DB Breweries had to innovate. TEXT BY FIONA ROTHERHAM
WHAT DO YOU do when faced with a market where annual per capita consumption has halved since the mid-1980s? Kiwis used to drink 120 litres of beer a year each. Now they drink to 60, says DB Breweries CEO Andy Routley. Which is a pretty big problem if you are a brewer. The answer: to find beverages “that bring new occasions back to the category”. Routley says any great innovation starts with market insights on what consumers want or need. What DB identified was a growing trend towards health and well-being. The company’s Dutch-based parent, Heineken, also wants to help foster a moderate drinking culture in New Zealand, he says. Enter Export Citrus, a lemon-flavoured lowalcohol beer made up of 40% beer and 60% juice. It has 2% alcohol by volume, compared with 5% for standard beers, and was launched in November 2013. Routley says Citrus took just six months to bring to market, the quickest in DB’s product innovation history. Export Citrus has already become the leader in the low alcohol beer space, accounting for 73% market share in grocery, Routley says. Customers bought five million bottles in the first year – 178% more than DB’s original forecast. Routley, in his understated English way, is “quite pleased” with that. He’s picking low alcohol beers, which currently make up just 2% of the local beer market by volume, will rise quickly, especially after drink driving alcohol limits were tightened late last year. Some of the problems encountered in innovating the product included having to give retailers “motivation”, essentially discounts in order to get Export Citrus on shop and pub shelves in the busy pre-Christmas period. DB
DB Breweries CEO Andy Routley
rightly predicted it would be a seasonal brew, with two-thirds of the annual volume sold during summer. Another issue was making enough product, which Routley admits was a “high class problem to have”. The natural juices which go into Export Citrus come from Heineken in Europe and DB had to rush orders and work extra shifts to keep up with the demand. The challenge now is how to unite the runaway success back into the DB family of Export Gold, Dry, and 33. There are economies of scale in advertising the entire brand, rather than just one family member, Routley says. And DB now needs to find new ways to grow the low-alcohol category. Routley won’t disclose what innovation is underway but says a sweet spot could be the 2.5%-3.5% alcohol by volume space. “And who’s to say you can’t go below 2%?” FIVE THINGS DB LEARNED: y Understand what consumers want and need. Once it had identified a consumer trend towards health and well-being, DB looked at what its parent, Heineken, already had in that space. Having a beverage it could tweak for local consumption shaved three to six months off the product innovation process. y Test it on consumers in the target group. DB reckoned Export Citrus would appeal to people 21 years and over predisposed to try new things, so tested it on that group.
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Have a back-up plan in case the first one flops. DB consumer tested several different recipes because, by definition, innovation is new and you never quite know how it will go.
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y Have a back-up plan in case the first one flops. DB consumer tested several different recipes because, by definition, innovation is new and you never quite know how it will go. y Aim for first-to-market advantage. Rival liquor retailer Independent Liquor snuck in three weeks ahead of the Export Citrus launch with its own low alcohol beer – which “irritated” Routley somewhat. Still, DB held the course because it had had such strong consumer response when testing its product and gained retail support. y Spend your marketing dollar where it has most purchasing impact. DB splurged on in-store and in-bar sampling, giving away half a million bottles to Kiwi consumers in the last quarter of 2013 and first half of 2014. Its research said once consumers sampled it in the right conditions, including the stock being at hand, they were 33% more likely to buy. Routley says, “you’re better getting the product into people’s mouths. That’s the success factor for a product that is tangibly different to anything else out there.”
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5 G O L D E N R U L E S for successful NPD Get advice From NPD consultants, finance or intellectual property specialists, or your NZTE regional customer manager. Different companies will require different expertise – you may need to work on strategy first, or look at lean manufacturing to ensure your production lines are efficient enough to handle new products coming through.
NPD is all about people – get that right and everything else will follow. This means assembling a good cross-functional team with clear roles and responsibilities who can work together to meet challenges and achieve well-set objectives. Ensure you have leadership that checks in but doesn’t take ownership of the process; that’s why you assembled a good team.
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Respect the process. This will help you avoid costly and time-consuming loopbacks. “There is a reasonably formal process to innovation and to NPD that’s been around for a long time,” says Armstrong. “While you can challenge it and improve it, you should respect the process to a certain degree.” Balance your projects. Have a mix of smaller, incremental projects and long-term projects and allocate time to both. Smaller businesses won’t be able to assign different teams to different projects; instead split your week and dedicate one day to a long-term project. No one is creative when they have 110 projects on the go so look at the flow of projects through your organisation to ensure it doesn’t all end up on the same desk with the same deadline.
Make your business strategy and NPD goals visual. Set out a physical plan that helps communicate to everyone in your team/company: where the business is now; where you want to be in five years’ time; how you’ll get there; what new products you’ll need to launch and how they need to perform. A new products roadmap will allow you to step back and take a bigger view. “There’s a huge amount of power in having your weekly work in progress visual,” says Van der Geest. “Map it out so everyone can see it. Don't keep it hidden on your computer. It also stops the sales guys knocking on the R&D guys’ door asking ‘Where’s my project at?’”
RISK OF SHOWERS Methven is fighting back after half a decade of financial losses. It hopes its new halo shower will help turn profitability around. But development wasn't all smooth sailing TEXT BY DEIRDRE COLEMAN
WHEN KIWI TAPWARE company Methven announced a $5.7 million profit for the year ended March 2015, it was the first major good news on the financial front for five years. Profits were up 21% on the back of a Chinese acquisition and improved results in Australia. But announcing the result last month, CEO David Banfield also stressed that $3.19 million-worth of “future-focussed projects” would play a key role in the ongoing success of the company. A significant part of that is the development of a new patented shower spray technology, Aurajet, launched in March. Look at showering from an outsider’s perspective and it’s hard to imagine there’s too much new product innovation left in that space. You turn on the mixer, shed your clothes, and hop in. Not so, says Scott Fitzsimons, Methven’s head of design; the challenge was to reinvent something most people wouldn’t think needed reinventing. The Dunedin-based group, in business since 1886 and listed on the NZX since 2007, spent three years on R&D for Aurajet. Instead of having a solid head, the Aurajet is shaped like a basketball hoop, and designed so hidden nozzles generate water jets that collide against the head's angled surfaces. Methven says this creates 20% more spray force and twice the amount of water-on-skin contact of a normal shower – without using extra water.
HARD YAKKA This innovation didn’t come about by accident, says Methven’s R&D head Jeremy Gear. The company devoted thousands of hours to interviews and consumer research; understanding what people wanted. “Having empathy for your user is paramount,” says Gear. “Two key things kept coming up: people want bathroom products
that both look amazing and perform well.” Methven’s 20-strong project team included designers, development and production engineers, standards specialists, technology specialists and tool-room and plastics manufacturers. Consumer testing in Australasia and the UK benchmarked the Aurajet against competitor products, and blind consumer testing saw it out-perform all other spray types, Gear says. THE DESIGN PROCESS Fitzsimons says Methven generally follows a structured design and development process, although with room for flexibility. “You have to be prepared to adapt and change direction, which this project pushed us to do,” he says. “The first concept sketches and prototypes for the Aurajet spray technology were conceived three and a half years ago. We continued to develop the concept for 18 months to prove that it was going to perform before we kicked off a two-year formal design and development project where we refined the product down to its purest form.” All in all, the company spent $1.2 million in development and tooling, not including marketing and commercialisation costs. DEATH AND OTHER CHALLENGES It wasn’t all smooth sailing. “Probably the most obvious challenge was developing a spray pattern that closed up
the hole… so we had a completely consistent spray distribution with no gaps. We probably tested over 200 different iterations of the spray pattern using both pressure-sensing pads and the best sensor there is – our consumers’ skin,” Fitzsimons says. Then the design team worked through hundreds more prototypes to adjust factors such as nozzle diameter and the deflection angle of the spray to increase its force. “We never faltered in our belief in this product, but it definitely challenged us.” Then there was a totally unexpected setback: the sudden death of design director Kent Sneddon. This was a tough one, as “[Sneddon] was pivotal in the transformation of Methven into a design-led company and had led the team during the conception and development of Aurajet Aio,” Fitzsimons says. IP MATTERS Methven owns two of the five global shower spray technology patents, and intellectual propery protection is critical, Gear says. The key thing is to start thinking about it at the start of the development process – not as an add on. “You need enough expertise inside your company to know you have something patentable, then work with an expert.” And make sure you have an IP strategy. “Sometimes patenting isn’t the right thing to do. And then if your patent it is too broad it may be non-defendable.”
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HOW NOT TO DO IT We’re always told to embrace our failures; that if you’re not making mistakes, you’re not learning. Still, there are a few pitfalls inherent in new product development it's worth while avoiding:
or someone would’ve beaten them to it and earned that first-mover advantage.”
PET PROJECTS NO ONE WAS BRAVE ENOUGH TO CHALLENGE The solution: People around you who’ll be honest, senior leaders who talk to the CEO, and teams that will challenge each idea.
WRONG PRICING Companies often price on a “cost plus markup” model, says Armstrong. Instead, look at how much a consumer would be prepared to pay. “Go into people’s homes, look at your competitors’ products and ask: Why would they choose mine and how much could I charge before they’d start substituting with something else?”
TAKING YOUR EYE OFF THE CUSTOMER The solution: Focus on the customer right the way through and loop back to that customer at every stage of the development. AIMING FOR PERFECTION The solution: “Sometimes 80% is good enough,” says NZTE's Craig Armstrong, who still harbours regrets about a failed project he worked on at Schweppes Australia. “We spent 18 months trying to get it 100% right, but we never actually took it to market. “The iPhone wasn’t perfect when it first came out, but if they hadn’t got to market, Samsung
TIME TO MARKET Getting your product out to the end user and getting them adopt typically takes far longer than the original design and creation. Build that into the project.
ENDLESS LOOPBACK CYCLE Constant loopbacks (idea, prototype, testing, redesign, new prototype etc) cost money and create waste and delays, says NPD consultant Saskia Van der Geest. The learning first (or lean) product development approach (page 64) is about testing first, then designing. Like the Wright brothers making their plane, companies need to break an idea into its critical component features and understand them, before producing a prototype.
Funding your NPD venture You can’t just magic your new product out of thin air: you need cash. Here’s where you might find it. Government commercialisation organisation Callaghan Innovation manages $140 million a year in funding and grants. The Ministry of Business, Innovation and Development – check its online Fund Finder. The Ministry of Primary Industries has a significant budget for funding primary sector science and innovation projects. Universities and research institutes have pockets of funding and deep expertise to help companies develop science and research. Banks: Many companies fund their research and innovation out of cash flow and debt facilities. Supply chain or retail partners may be willing to share some of the costs. For example, companies developing private label ranges for supermarkets. New Zealand Innovation Council doesn’t have money, but provides networking and an online hub with access to innovation and business-growth resources, experts, forums and events.
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Putting together a start-up? What’s your personality? Almost nine out of 10 Fortune 100 companies use Myers-Briggs personality profiling in some way to check out how their employees view the world and make decisions. But it’s also a cunning tool for start-ups. TEXT BY LATESHA RANDALL
ARE YOU ESTJ or INFP? ENFJ or ISTJ?
Chances are if you work for a big corporate, particularly an American one, you’ll be able to answer that question. According to the Boston Globe, Myers-Briggs Type Indicator psychological testing is used by around 80% of Fortune 500 companies (and 89 of the Fortune 100), with around two million people taking the test every year. Chances are if you work for a start-up or SME, these acronyms will be less meaningful. But there is some evidence that understanding personality types and how they work together could make a difference for your early-stage business. (First, a word of warning: Myers-Briggs also has its detractors, who say splitting people into either/or types (extrovert or introvert, sensing or intuitive etc) is unscientific and ridiculously simplistic. But surely 400 Fortune 500 companies can’t all be wrong?) I took the test recently and I got ENFJ – Extroverted, Intuitive, Feeling, Judging. My business partner Seb (who is also my real partner) was INTP – Introverted, Intuitive, Thinking, Perceiving. Pretty much polar opposites. But apparently this is not a bad thing when you’re planning on running a start-up. Research by Stanford, the University of California, and Tepper School of Business all showed that diverse groups are the most productive. “The worst kind of group for an organisation that wants to be innovative and creative is one in which everyone is alike and gets along too well,” says Margaret A. Neale, professor of organisation and dispute resolution at Stanford Graduate Business School. Yes, it’s harder to communicate, and easier to fall out, but what the research shows is that your team will have a better collective intelligence 72 | IDEALOG.CO.NZ
if it is made up of people with different personalities, as long as they also understand the differences between themselves and others. Are you an entrepreneurial type? ENTPs are often classified as the “entrepreneur” type – think Walt Disney and Apple co-founder Steve Wozniak – although there are also successful entrepreneurs with ENTJ (Bill Gates), and INTJ (Mark Zuckerberg) types. The thread here seems to be the tendency towards intuition over sensing – the ability to take risks based on gut instinct. But a “sensing” focus – paying attention to physical reality, what you see, hear, touch, taste, and smell – is also critical for a successful
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The worst kind of group for an organisation that wants to be innovative is one in which everyone is alike. With differences you have a better collective intelligence.
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business, according to Dr Daniel Robinson, an expert in applying Myers-Briggs psychological types at Iowa State University. He argues an intuition-lead entrepreneur benefits from having a sensing-led person on their team. “If Sensors are absent, the team has to consciously stop and remember to ask the kinds of questions that a Sensor (who is firmly reality-based, dealing with ‘what is’) – would ask. For example, have all the necessary facts, details, and data been discussed and addressed?” Geoff Lorigan, founder and director of New Zealand’s Institute for Strategic Leadership, agrees. Based on observations of over 70 senior leadership teams over 12 years, he says the most effective teams are comprised of the four sets of ‘types’ – The Visionary (NF), The Logical (NT), The Data and Specifics (ST), and The Relational (SF). “Collectively they represent the gifts and talents of a ‘whole brain’, whilst offsetting many of each type’s blind spots.” Being different and getting along anyway. Sue Blair runs Auckland-based Personality Dynamics, helping businesses with identifying, understanding and working with different personality types within their teams. She says she recently worked with a publishing company. “I was brought in because the team manager was having great difficulties working with one of her staff. She thought this lady was a loose cannon who didn’t want to be managed. The manager couldn’t figure out how she operated at all, whereas her other staff member was a dream to work with.” Blair took each staffer through the personality testing process. “It turned out that the manager was an ISTJ – they run a tight ship, and like to be an anchor for their teams. They make sure all the boxes are ticked, procedures are followed and, most of all, that there are no surprises. “The staff member she got on fabulously with, was (no surprises here) an ISFJ, a very similar personality with the difference of ‘feeling’ – making her accommodating and eager to please. “The woman that was driving the ISTJ manager crazy was an ENFP. This type is an absolute ideas factory, and love to leave things to the last minute because they are 100% confident in their ability to ‘wing it’ successfully. You can see how these two personalities were head-butting at every turn!” Having the different personalities on the team had the potential for creating innovation, she says, but it wasn’t working because the women felt they couldn’t work together.
ILLUSTRATION ANGELA KEOGHAN
WORKSPACE | Personality
WORKSPACE | Culture
Doing the Myers-Briggs testing was key to solving the problem. Once the two colleagues knew what each other’s expectations and preferences were and why, they were able to tailor how they operated. THE DANGER ZONE If you are an early-stage CEO and hiring based on Myers-Briggs, Blair says, you need to be a bit careful. People going for a particular role may (consciously or subconsciously) cheat on the test answers, tailoring them to the kind of role they’re in or want to have, she says. (I’m after a marketing job, so I’m sociable and have great ideas.) Conversely, it’s important to remember that people that tend towards one personality type can still learn traits for the opposite personality. “Hiring someone [using only Myers-Briggs] could rule out someone who has consciously developed exactly the qualities you’re looking for. Discounting someone purely because of personality type is unethical and unwise.” Complement MBTI with emotional intelligence and skills-based profiling, she says. ½
Finding awesome weirdos
PERSONALITY RESOURCES:
A New Zealand company is trying to make cultural fit a key part of company recruitment – and make the hiring process a whole lot less tedious
Find out your type ($49.95) – www.mbtionline.com
TEXT BY NIKKI MANDOW
Read Gifts differing: Understanding personality type by Isabel Briggs Myers, and You’ve got personality by Mary McGuiness Try out card-sort tools with your team – www.personalitypuzzles.com
WHO OR WHAT WAS MYERS-BRIGGS? The Myers-Briggs Type Indicator was invented by an American mother-daughter team, Katherine Cook Briggs and Isabel Briggs Myers. They took Carl Jung’s then ground-breaking theories on personality types and adapted them, initially, to help women entering the industrial workforce for the first time during World War II. The idea was that understanding someone’s natural preferences (eg extravert or introvert, feeling or thinking) would help identify what type of war work would best suit an individual. The indicator was created in 1942 and the handbook was first published in 1944.
KEREN PHILLIPS AND her team at recruitment software company Weirdly are into celebrations. High-fives and hooters and confetti cannons, that sort of thing. For their first birthday they threw pop-up parties at other people’s offices, where they ran amok with helium balloons, cookies and – yes, really – a mariachi band. It’s a big part of the Weirdly culture. But it’s not everyone’s cup of tea. For some people, all that razzmatazz and back-slapping would be uncomfortable, unnecessary. They wouldn’t work for Weirdly if you paid them. Which is the point of Weirdly. To give companies and potential employees a way of working out whether the cultural fit between them is right. Weirdly’s recruitment quizzes focus less on a candidate’s skill sets, qualifications and experience, and more on their values, the way they think and their response to problems. Filling in the Spark online graduate recruitment questionnaire (spark.co.nz/graduates), for example, is more like a doing a women’s magazine personality quiz than a job application.
Q: You have a new idea that will mean extra work, but could have a big positive impact on the end user. How likely are you to bring it up in the next team meeting? A) Likely. Let’s see what everyone thinks B) Not sure if I want to open a can of worms Or: Q: You are at home playing network games and the power goes out. The grid could be down for a few days. Which reaction sounds more like you: A) Go hunting for food and cooking equipment B) Find a generator NOW! How are you gonna run your Xbox? Oh, and there’s the question about your plan for survival in the zombie apocalypse. Really. The aim, says Phillips, is about ensuring the employer-employee relationship works. “The people you are recruiting are people you are going to spend 50, 60, 70 hours with a week. It’s really important they are people you share fundamental values with; that you can spend time with.” The idea of cultural fit isn’t new. In 1975, organisational psychologist John Morse found, perhaps not surprisingly, that people in jobs that matched their personality felt more capable. »
JULY – AUGUST 2015 | IDEALOG.CO.NZ | 73
WORKSPACE | Culture
74 | IDEALOG.CO.NZ
When the hat fits: Weirdly team members, from left to right: Dale Clareburt,
Hayden Raw, Daniel Young, Sebastian Hallum Clarke, Keren Phillips, Simon Martin
Twelve months on, Jucy and Glengarry’s are still on board and Weirdly is working with more than 200 other clients, including Spark, Xero, and Vend. The company is close to break-even and has six staff – with more to be added by the end of the year. The founders are also looking to raise just under $1 million this year, through angel investment, with the funds earmarked for integrating Weirdly with job boards (Trade Me, Seek etc) and traditional company applicant tracking systems (ATS’s). Spark general manager human resources Danielle George says the company-formerlyknown-as-Telecom has been testing Weirdly quizzes with its graduate and “agents at home” programmes since the beginning of May. “With agents at home, because they are working from home, we need self-starters, with high levels of initiative, and an ability to solve customers’ problems. “With graduates, there’s a strong flavor around team work, problem-solving and coping under pressure.” So Spark worked with Weirdly to design questionnaires which reflect those priorities. George says with traditional recruitment processes, Spark often didn’t find out that potential employees had or lacked key cultural attributes until the final stages of the process.
With the Weirdly quizzes, they are hoping to build a more suitable short-list. “It’s still in the early stages, but the signs are good.” Weirdly’s Keren Phillips says companies are also choosing the quizzes as a way to show potential employees they aren’t your bog-standard employer – hence, presumably the zombie apocalypse question on the Spark recruitment questionnaire. Don’t they find people just give the answers they think the hiring company wants? Maybe, says Phillips, but setting the questions with two right answers makes a difference. Take a Weirdly staple: How fast do you walk? As a rule of thumb, speed walkers are actionoriented, and efficiency-driven; amblers are more creative, imaginative, explorative. “It’s not conclusive, but it’s an indicator,” Phillips says. Meanwhile, Phillips has one tiny worry around the growth of the company. Early in Weirdly’s development, over a few wines – and maybe a mariachi band or two – she committed to getting herself tattoo-ed with the company’s logo once they reached $1 million in turnover. “At the time it felt like a big number and I felt safe, but in retrospect…” Serves her right. She should have worked for a boring company. ½
PHOTOGRAPHY BY LU DAVIDSON
Fast forward 30 years and research by Professor Amy Kristof-Brown established that employees who fit well with their organisation, co-workers, and supervisor performed better, had greater job satisfaction, and were more likely to remain with their company. So the theory was there, but Phillips and the three other Weirdly co-founders (two, including Phillips, were digital designers in a previous life, the other two were recruitment consultants) saw a disconnect between what they knew about the importance of cultural fit, and how Kiwi companies recruited their staff. “Most of the people we knew wanted to work for a company they believed in, doing a job they loved. And we knew that produces a better company – people are more productive, more creative,” Phillips says. “But a lot of New Zealand businesses haven’t got their heads around how important cultural fit is for their business, so most were sticking to traditional recruitment practices.” Which are, by the way, “some of the most boring, stressful, fruitless processes you can imagine”. “Look at the job ads for sales people: ‘Can you sell a lot of stuff? Wanna join our team and earn a lot of money?’ It’s not: ‘Come in and work with us to build something you believe in and align yourself with values you share.’” The trouble is, measuring cultural fit isn’t easy, and before Weirdly was going to work as a business, the co-founders needed to find out if they could automate the process. The first prototype of the Weirdly quiz was tested in early 2014 with Jucy, the car and campervan rental company, and with Glengarry’s bottleshops.
WORKSPACE | Books
Books
Universal Man. The Seven Lives of John Maynard Keynes Richard Davenport-Hines Harper Collins, $49.99
I WOULD HAVE paid much
more attention to Keynesian economics in lectures at uni if only I had known what an interesting life Keynes had lived. Reading this book reminded me of the E.M. Forster quote; “The king died and then the queen died is a story. The king died, and then the queen died of grief is a plot.” Keynes’ life was like an imaginatively crafted plot. He was a true renaissance man, an erudite, cultured, bisexual genius. But he was a flawed genius, just the way we like them to be. Keynes, who died 70 years ago this year, was a boy prodigy who later revolutionised economics and whose philosophies, once discredited, might now be able to put the world’s financial systems back on track. For a time, economics was dominated by Keynes detractors, capitalist ideologues who believed laissez faire free market policies would result in prosperity and employment for all. It is now apparent that when money, like shit, hits the fan, it isn’t necessarily evenly distributed. Some government intervention is needed. Come back Keynes – we need you. (MH)
Ruth, Roger and Me. Debts and Legacies Andrew Dean Bridget Williams Books, $14.99
NEW ZEALAND Rhodes Scholar Andrew Dean, as one of the children brought up in the shadow of the 1991 “Mother of all budgets” tells the story of what his generation has inherited from three decades of economic reform ushered in by Finance Ministers Roger Douglas and Ruth Richardson. With a mix of memoir, history and interviews, Dean explores the experiences of “discomfort” and “disconnection” of young people. “The student loan scheme, poverty wages, unpaid internships, casual contracts, unemployment, underemployment, the spiralling cost of housing, even doctor's fees – all of these have limited public histories”, Dean says. “Part of the project of this book is to give a fuller account of them.” Dean concludes that young people have “a very deep sense of disempowerment and lack of belonging” – although this is a sentiment which Ruth Richardson, who Dean interviews, dismisses. The author ends with a call for “a new national story” of aroha, empathy and compassion. A call that resonates with me. (MEH)
The real life MBA
B is for Balance (2nd ed)
Jack and Suzy Welch
Sharon M. Weinstein
Harper Collins, $39.99
Sigma Theta Tau International, $US34.95
MBA QUALIFICATIONS
don’t interest me (with all due respect for people who’ve taken time and trouble to obtain one). Organisations need administrators; for example, someone has to take care of ‘carparks and toilets’. But it takes a pedantic mindset I just don’t have. Joking aside, I’m wary of people who think applying templates and ‘best practices’ to strategic planning is visionary. Case studies often don’t prove ‘jack’ for any organisation other than the one which is featured. Which brings me to Jack and Suzy Welch’s new book. The MBA reference in the title seems as dismissive as I’ve just been. In parts it reads more Suzy, a writer, than Jack. But, in fact, it’s a useful and easy-to-read guide from a legendary business leader. Scratch the surface and it’s really a brochure for the Jack Welch Management Institute where, for a modest US$39,000, you can buy your MBA online. Just spring for the book. (DM)
SHARON WEINSTEIN and her co-authors have two challenges getting people to read the new and improved version of B is for Balance. One: work/life balance has been written about so many times; and two: people looking for this balance don’t have time for 300 pages, unless there’s quick payoff. Weinstein and co address challenge two by adding practicality, adopting the classic self-help 12-steps method and adding tips and reflections at the end of each chapter. The steps cover useful things like stress management, improving diet and sleep, effective technology use, finding balance at home and work, and setting goals. But this manual may be less applicable for people who don’t share the authors’ holistic health bent. Case in point: “Mindfulness and flow are two sides of the coin that represents engagement; they are two forms of here and now presence... Flow is about complete absorption in a task such that consciousness is transcended.” As Monty Python put it so eloquently: “Do what, John?” (AS)
Reviewers: Mike Hutcheson, Madeleine Heron (MEH), David MacGregor, Amanda Sachtleben
JULY – AUGUST 2015 | IDEALOG.CO.NZ | 75
OPINION | Technology
Great expectations Why I'll be taking the next big tech announcement with a grain of salt WE COVER A fair bit of technology at Idealog and we’re usually among the first in line when it comes to product launches. So I watched Microsoft’s latest launch last month – the new Hololens virtual-reality technology – with more than a little enthusiasm. Make no mistake: the Hololens is a pretty big deal. According to everyone, it is set to bring interactive, high-definition holograms to the real world. It’s very much the stuff of a sci-fi nerd’s wet dream. The presentation was, as to be expected, equal parts cringe-worthy and slick, and, as usual, it was impossible to come away from it not being impressed. “Hololens,” said the presenter, “is the future of computing,” and for a moment I believed it. But hang on a minute. I get the feeling I’ve been here before. Why must these things always resort to the same hyperbole? And more to the point, why do I always believe it? Against my better instincts, I once again found myself in the same state of rapt, receptive and uncritical reception – someone get me a Hololens now. I fall for it every time and I don’t think I’m the only one.
As a species we have mastered the art of the tech announcement. Steve Jobs certainly knew how to work a crowd. He knew his audience and he knew how to build a mystery. When the ‘big’ reveal finally came – Look! It’s another iPhone! And this time it’s WHITE! – the crowd would only wait for its spasms of rapture to pass before clambering to the nearest iStore. Pavlov’s dogs had more self-possession. And while modern tech companies don’t always exhibit Jobs’ flair, they too have learned how to put on a hell of a show, one that projects a ludicrously confident, hyper-idealised reality that couldn’t possibly find its match in the dayto-day life of the products being flogged. As I write this, the internet is taking some joy in dismantling Elon Musk’s Powerwall, a solar powered battery solution that can – if you believe the hype – power your whole house for a one-time payment of a couple of grand. The announcement felt like the beginning of a revolution. Screw you fossil fuels! Get bent, big power! Musk’s vision of the future – where we are all off the grid, never to return – is so bright, that there’s no way not to be swept away with it, at least a little.
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Sorry Amazon, there's more to a well-lived life than an endless stream of well-managed domestic purchases.
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Trouble is, now the beans are being counted and numbers crunched, Powerwall turns out to be considerably more expensive, and considerably less grunty than current battery technology. It’s green alright, but hardly the revolution promised at the release. “Another toy for rich green people,” scolded Forbes. Still, for me, none of this hype can hold a candle to the enchanting preposterousness of Amazon Dash. Though not a joke, April 1 saw Amazon release a slick YouTube promo for this USB-sized pushbutton auto-replenishment device you keep next to your coffee maker, washing machine or pantry. When you run out of a particular consumable, you activate Amazon Dash with the push of a button and boom, you’ve just ordered washing powder from Amazon.com. Great idea, right? The convenience! The cleverness! The sheer ‘internet of thingsness’ of it! The ad makes it all look so logical, so reasonable, the fact that we need never go shopping again. But once again, as the novelty wears off and the cold light of day sets in, any rational person can see that Amazon Dash is, in fact, outrageous in its horribleness at the very least, if not the first horseman of some sort of consumerist apocalypse itself. Yup, this is smart technology alright, technology that promises a utopian future in which we never, ever run out of certain everyday items ever again. But what of the benefits that come from actually considering purchases before making them? Things like: Do I need this? And do I need it couriered to my door now? Is there a cheaper, less wasteful, or environmentally friendlier option that I’m missing? Should personal convenience be my only point of reference when making a purchase? Sorry Amazon, there’s more to a well-lived life than an endless stream of well-managed domestic purchases. And it’s not that I’m a Luddite, I swear. I want my world to be filled with holograms, cheap power and ultra-convenience just as much as the next guy. But I know, as we all must, that the promise of the promo and the realities of real life just can’t match up. They never do. We’ve been here before. ½ Jonathan Cotton is digital editor of Idealog. He loves reading, writing, the internet, and the smell of napalm in the morning.
76 | IDEALOG.CO.NZ
ILLUSTRATION ANGELA KEOGHAN
Jonathan Cotton
OPINION | At work
Penelope Whitson Rethinking the review
ILLUSTRATION ANGELA KEOGHAN
How Deloitte’s decided to radically revamp its performance appraisal system ON A RECENT Saturday night raging it up in my pyjamas and reading the Harvard Business Review for kicks, I came across an article on Deloitte’s new performance appraisal system. Now, there are countless things I loathe in life, feijoas being a principal one. But when it comes to the workplace, high on the list is the review process, not least because trying to rate myself out of five when I am clearly at least a six, is impossible. Unfortunately, as Mary Jenkins, co-author of Abolishing performance appraisals, points out, the whole idea of not doing them is almost seen as irresponsible. So performance reviews are likely to be here to stay. But how we do them could be about to change. Many moons ago, Michael Mount, Steven Scullen and Maynard Goff did some research involving almost 4,500 managers being rated on three performance dimensions by two bosses, two peers, two subordinates and themselves. Based on this, Mount, Scullen and Goff concluded (in the book How people evaluate others in organisations) that, “Although it is implicitly assumed that the ratings measure the performance of the ratee, most of what is being measured by the ratings is the unique rating tendencies of the rater. “Thus ratings reveal more about the rater than they do about the ratee.” Deloitte, ahem, rated this research and, crucially, discovered conducting performance reviews for its 65,000-odd staff took two million hours a year. (It is a financial consultancy firm after all.) The April 2015 Harvard Business Review article details how the company is starting to turn the system upside down, revolutionising the manager-employee review process to save money and ensure the company isn’t capturing what Mount, Scullen and Goff termed “idiosyncratic rater effects”. Going forward, its new review system will ask team leaders not about the skills of each team
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Deloitte discovered conducting performance reviews for its 65,000-odd staff took two million hours a year.
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member but about their own future actions with respect to that person. At the end of each quarter or project, managers will give themselves four propositions about each team member: 1. Given what I know of this person’s performance, and if it were my money, I would award this person the highest possible compensation increase and bonus. (1–5) 2. Given what I know of this person’s performance, I would always want him or her on my team. (1–5) 3. This person is at risk for low performance. (Yes/no) 4. This person is ready for promotion today. (Yes/no)
This shiny new process means employees aren’t rated against a long list of skills and projects that were finished months ago. Instead the process is forward looking and talking about people instead of ratings. One of my colleagues often likes to ask us in withering tones if we’re doing something this year just because we did it last year. Irksomely, he has a point. Are you running your performance reviews the same way you always have because you think they work, or because that’s just the way you’ve always done them? American singer Sheryl Crow says that za change will do you good. And Sheryl is never wrong. ½ Penelope Whitson is a word nerd with a fondness for syntax, cats and lolling about scoffing cake. She tweets on an irregular basis at @PenelopeWhitson JULY – AUGUST 2015 | IDEALOG.CO.NZ | 77
OPINION | Journalism
Survival of the richest Reports of the death of news journalism have been greatly exaggerated THERE’S BEEN a lot of hokum talked in the last wee while about the demise of news. The demise of newspapers? Yes, although perhaps not extinction. Print remains a powerful medium. The rise of click-bait over traditional issues coverage in popular media? Yes. The death of news? No. News-gathering will survive, but it risks becoming the preserve mainly of those who either need to or can afford to buy it. If it weren’t for the fact that news consumers have always had to fork out a couple of bucks for a newspapers, this could be described as a growing privatisation of news. The difference between this privatised news and the old kind is that the old kind tended to be very affordable. When advertising revenue held news enterprises together, subscriptions and cover prices were low enough for newspapers, at their best, to be a democratising force in society. Government-funded broadcasting has also long provided a counterweight to privately funded print and electronic news media. Yet that is far less the case these days. There are pockets of serious journalism in public broadcasting, but increasingly that role is falling to Radio New Zealand while free-to-air public broadcasting struggles to find a profitable business model. Meanwhile, those who seek to know what is “really going on” are increasingly not only forced, but willing, to pay for high quality news and intelligence. Perhaps the best example of this in New Zealand is the Energy News subscription-based news business, which charges players in the energy sector like a wounded bull for a service notable not only for its capacity to capture the sector’s minutiae, but for the quality of its analysis. Yet virtually no one outside the energy sector is aware of Energy News or what it does. Meanwhile, New Zealand’s mainstream publishers continue to grapple with the 78 | IDEALOG.CO.NZ
transition to a world in which news consumers have become accustomed to receiving their news for free on the internet. Some are committing to a new type of digital story-telling, betting they will be able to drive traffic social media-style, and support their news-gathering with advertising. Others will try to make paywalls work, offering a bare bones service outside the paywall and a paid subscription service that will try to replicate the affordable and therefore democratised news of old. Both will struggle. A clear winner may take years to emerge. Execution as much as strategy will determine success. It’s possible that both business models will work. However, the likelihood is also that specialised news, written by the kinds of experienced correspondents with a few years on the clock who used to be the bedrock of
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Every industry thrives on intelligence about competitors, colleagues and the next big thing, and journalists’ roles have always been, at some level, to organise that information in a compelling way.
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traditional news organs, will increasingly go behind paywalls of their own making. Specialised sector-specific news has always had an audience. However it is the capacity to produce it at low cost while charging for the experience that underpins the quality of the content, and this will be increasingly attractive both for individual journalists and groups of like-minded entrepreneurs. A laptop, a cellphone and a decent internet connection are all a journalist needs today to make a living. Thirty years ago, when my career started, you had to work for someone who had enough money to own printing presses and a fleet of trucks to get the news to market. These days owning – even understanding – the technology is secondary to the skill of understanding what news is, how to write it, and now, how to charge for it. Journalists need not fear that algorithms can replace the judgment required to write a news story. Algorithms will improve data collection, but they don’t think for themselves. In other words, the existence of a role for people who create news as a product is assured. What’s not clear is who will be able to afford to read the information they produce. However, every industry thrives on intelligence about competitors, colleagues and the next big thing, and journalists’ roles have always been, at some level, to organise that information in a compelling way. Call it curation as much as the discovery and broadcasting of newsworthy facts. A vast market still exists for people who need or want to know things about their areas of interest and are willing to pay a trusted source to produce that information. That takes skills and experience to deliver well. If news starts to take on the character of paid intelligence, available only to those who both need and are able to pay for it, where will that leave the person in the street who cares, can’t afford the ‘real oil’, and is left in a sea of free online propaganda from any number of interested parties? The best hope remains low-cost paywalls for general news sites, which must succeed if the promise of journalism as a vocation, let alone a purely commercial activity, is to survive. ½ Pattrick Smellie is a founder of the BusinessDesk news service. He puts “human cannonball” as his occupation on immigration forms. @pjsmellie
ILLUSTRATION ANGELA KEOGHAN
Pattrick Smellie
OPINION | Social media
Vaughn Davis The bumpy road to prosperity
ILLUSTRATION ANGELA KEOGHAN
The internet is great. But there’s no substitute for bumping into real people for getting our creative juices flowing THE GREAT THING about the Internet, you see, is that it allows us to connect, share ideas, do business and run businesses from wherever we want. The tyranny of distance that has for so long simultaneously forced us to innovate and improvise while throwing up almost insurmountable barriers to export markets has been removed. Our population, scattered over a string of islands the length of the United States, can now connect as if they lived on the same street, rather than the same mostly empty stretch of ocean. The billions we’re spending on ultrafast broadband will transform connectivity and innovation more in a decade than roads, airlines, telephones and broadcast media did in a century. Well that’s the dream, anyway. Shame it isn’t quite true. I’ve been thinking about this a bit recently. If our investment in all this technology is to lead to anything more than faster kittens, you’d hope that the light at the end of the internet tunnel would be a neon sign reading “innovation.” You know, inventions, ideas, new things to make and sell or radically better ways to do what we already do. A guy call James Webb Young had something to say about that early last century. He wrote in his book A Technique for Producing Ideas that a new idea is “nothing more or less than a combination of two existing ones.” It makes sense when you think about it. Hard drive plus headphones equals iPod. iPod plus goats equals best-selling game Goat Simulator. And so on. More recently, Auckland University’s Professor Shaun Hendy has been looking at the subject too, and believes that for those idea collisions to happen, the first two ideas have to be diverse. Two ideas about cows won’t necessarily lead to a great idea about cows. A cow idea crossed with a drone idea… different story. So how does this relate to the internet? The worrying news is that in many ways it doesn’t. Hendy’s research looked at patents registered
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In places where doctors bump into poets, and engineers bump into goat farmers, ideas just seem to happen. And the bigger the city (at least going by the measure of patents) the more of them there are.
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per 1000 people in different sized cities around the world. And the clear result was that the bigger the city, the higher the patent rate. Dispersed but well-connected populations can’t compete, it seems, with actual tightly-packed seething masses of humanity. If you believe, like James Webb Young did, that ideas come about when other, different, ideas collide, then the straight lines of the internet start looking a little less attractive, and the random bumps you find in cities begin to seem a lot sexier. In places where doctors bump into poets, and engineers bump into goat farmers, ideas just seem to happen. And the bigger the city (at least going by the measure of patents) the more of them there are. Those accidental, diverse, bumps do happen online, for sure, but they’re not what the internet
is best at. Search engines give you what you’re looking for, not what you might unknowingly need. Social media famously creates filter bubbles, our self-selected friend worlds reflecting our preferences and biases rather than challenging or expanding our thinking. So what can we do about this? I’m not arguing that our investment in connecting New Zealand’s homes and businesses with high speed internet is wasted. But the straight lines of virtual connectivity need to sit alongside the bumpy ones of coincidental human contact. As a country, we might want to reconsider seeing the growth of our cities at the expense of the provinces as a bad thing. As businesses, we might ask if the productivity and infrastructure gains of allowing people to work from home are nixed by a hit to our ability to meet up and innovate. For us creative-directing goat farmer types maybe it means there’s something to be said for less time tweeting the usuals and a bit more time toasting strangers down the local.½ Vaughn Davis farms goats, flies aeroplanes, builds brands, hosts a radio show and tweets @vaughndavis. He once landed a big aeroplane on a sheet of floating ice in Antarctica but that was ages ago. JULY – AUGUST 2015 | IDEALOG.CO.NZ | 79
OPINION | Democritus
Mike Hutcheson Jobs for life or strife? Idealog’s own ad guru wonders if there wasn’t some merit in an employment regime where firing someone still had a weapon involved GONE ARE THE days when you had a career for life. A recent Forbes Magazine article stated the average worker in the US stays in a job for around four and a half years, but young millennials expect to stay less than three. I expect the same applies here. Job–hopping seems to be endemic among those born in the two decades before the turn of the century. That means they could have somewhere between 15 and 20 jobs throughout their lives. This brings into focus the paradox created by employment legislation, which protects employees from wrongful dismissal and provides for notice periods and financial cushions (sometimes small, sometimes large) to be paid by employers in the case of redundancy. However no such obligation exists for the employee. They can walk out at any time. The irony being that if they resign they get nothing, if they are made redundant they can negotiate a payout. e I spent most of my life in advertising, where you were regarded as an optimist if you took hat your lunch to work. In the Mad Men days in that fragile business you could take a recalcitrant worker down to the car park with a Luger and be done with it in a few seconds. Metaphorically speaking, of course. Advertising is a business that has given rise to some of the more spectacular dismissals and less sensitive firing lines. New recruits were e told that their life in the business would be like that of a Battle of Britain fighter pilot; noble and glorious, but quite possibly very short. One of the better termination conversations came out of an advertising agency in Wellington. The overpaid but talentless art director was summoned to his boss’ office: “I’m firing you.” “What for?” “Health reasons.” “What do you mean?” 80 | IDEALOG.CO.NZ
“You make me sick!” Another immortal line was used on a lazy account director: “Well Tarquin, (name changed to protect the guilty) we don’t know how we’re going to get along without you, but from Monday we’re going to try.” Managing advertising people has never been an easy task, as one agency general manager found when he tried to curb unauthorised absences by his employees. He suspected his staff of long lunches and generally having a good time during working hours, excusing their absences as essential appointments. Trying to enforce an edict prohibiting such disgraceful behaviour, he picked on legendary creative genius Len Potts, who was making a dash for the exit: “Where do think you are you going Potts?” “To get a haircut.”
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In the Mad Men days in the fragile advertising business you could take a recalcitrant worker down to the car park with a Luger and be done with it in a few seconds. Metaphorically speaking, of course.
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“But you aren’t allowed to go on company time.” “Why not? My hair grew on company time.” “Not all of it!” “That’s OK, I’m not getting it all cut.” When the writing is on the wall, a good person takes the hint, resigns and is able to get another job with little trouble. In many cases though, less confident people consult lawyers and are generally advised to remain, frozen like possums in the headlights. It is sad to watch. Upon departure, he or she will get a handout after a long and protracted charade, involving consultations, warnings and notice periods, during which the atmosphere becomes toxic, personal relationships breakdown irretrievably and the warring parties start taking notes of every real or imagined slight. The ensuing Employment Court hearing consists of an exchange which goes, more or less, like this; “On the 16th you...” “Did not.” “Did so.” “Did not” “Did.” “Didn’t.” etc; Meanwhile the lawyers smile as the 15-minute segments tick by. The adjudicator never knows who to believe so he or she splits it somewhere up the middle, unless one of the parties has been really out of line – and everyone settles for a number different to that which they’d imagined, in order to minimise the fees. It’s yet another example of how our society ends up doing the wrong things for the right reasons. Whenever something bad happens we blame others. Somehow death has become regarded as failure on the part of the medical system, and crime the fault of government economic policy. We are constrained by legislation and policies which ostensibly encourage fairness, yet inevitably create unfairness. But life isn’t fair; if it was Winston Peters would be in Kaitaia, running a Bouncy Castle franchise. I read recently a great quote: “Sometimes individuals do stupid things, sometimes governments do stupid things. Of whom are you most afraid?” ½ Mike Hutcheson is a former Saatchi & Saatchi grand fromage, a director of Image Centre and just learning to read without his finger under the words. mike.hutcheson@image-centre.co.nz
03—04. July 2015
Victory Convention Centre Auckland
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